Posted by | August 8, 2010 12:19 | Filed under: Top Stories

by Stuart Shapiro

Jason DeParle has a long expose in today’s New York Times on mismanagement at the Minerals Management Service (MMS), the agency formerly  (it was disbanded after the Deepwater spill) responsible for oil rig safety.

The causes of the spill remain unclear, but a number of the agency’s actions have drawn fire: it shortened safety and environmental reviews; overlooked flaws in the spill response plan; and ignored warnings that crucial pieces of emergency equipment, blowout preventers, were prone to fail.

The story has gained a bacchanal gloss because agency employees in Louisiana and Colorado took meals, gifts and sporting trips paid for by the industry, and several Colorado officials had sex and used drugs with industry employees. But the agency’s culture was shaped by forces much bigger than small-time corruption.

Those bigger forces include its mission (primarily assisting the oil industry and gathering royalties) and its bureaucratic location (in the pro-industry Department of the Interior).  These coupled to create an agency culture that overlooked safety and did whatever it could to facilitate oil production.

As the Consumer Financial Protection Agency, it is important to keep these things in mind.  The beginning of an agency is a critical time for it.  Its culture is basically formed and the initial top officials have the key role in this creation.  Appointing Elizabeth Warren be the CFPA’s first administrator would create a culture of agency vigilance over financial institutions.  Appointing a friend of Wall Street could create a culture like MMS in fancy suits.

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Copyright 2010 Liberaland
By: Stuart Shapiro

Stuart is a professor and the Director of the Public Policy
program at the Bloustein School of Planning and Public Policy at Rutgers
University. He teaches economics and cost-benefit analysis and studies
regulation in the United States at both the federal and state levels.
Prior to coming to Rutgers, Stuart worked for five years at the Office
of Management and Budget in Washington under Presidents Clinton and
George W. Bush.