The Fox Guarding the Henhouse (leads to regulations)

The CEO of JPMorgan, Jamie Dimon, received increased scrutiny after his bank suffered major losses due to risky trading over the summer.  It soon came to light that Mr. Dimon, in addition to running JPMorgan, also serves on the Board of the New York Federal Reserve.  This revelation caused an uproar:

"The conflicts of interest are so apparent that they're laughable," Sanders told CNN's Wolf Blitzer last week. "Here you have the Fed, which is supposed to regulate Wall Street. Then you have the CEO of the largest Wall Street company on the board which [it] is supposed to be regulating. This is the fox guarding the henhouse."

In the Economic Theory of Regulation, Stigler argues that if they have the power, businesses will use the coercive power of the government to create regulations which are in their favor and will even go out of their way to get these regulations enacted (the capture theory).  As a result, Stigler would not be surprised by Mr. Dimon’s spot on the NY Federal Reserve.  This position gives Dimon the ability to influence regulation in order to help his bank.  Dimon claims his role is more of an advisory position than anything else, but that still puts him in a position of power where he can acquire, design and operate regulations that favors banks such as JPMorgan.