Spitzer makes the point that regulatory capture is a big part of why federal agencies looked the other way at actions by financial market players that should have raised red flags.  It's a fact documented by left wing historians like Gabriel Kolko and right wing economists like George Stigler that those being regulated by government eventually take over the agencies that regulate them.

Unfortunately, when some market failure becomes too big to ignore, Congress's natural response is not to fix the existing regulatory apparatus so that it works properly, but rather to add new layers of regulation and agencies on top of the existing agencies and regulations.  That's what it did with Sarbanes-Oxley in the wake of the Enron collapse and that's what [it] is going to do again to prove that it learned the lessons of our recent financial debacle.