This is from Chapter 12, “Why the Housing Bust Led to a Financial Crisis”:
Government regulatory agencies face no market competition; they cannot be driven out of existence by failure to attract repeat business when they do a bad job. The rules they propose for regulating business behavior cannot be refused by enterprises that prefer to do business according to other rules. The revenue stream of government regulators is captive: It originates not in satisfied clients in repeated dealings day after day, but in taxpayers’ surrender of their property to the IRS every April 15th. Government regulatory agencies can botch their jobs—as the Basel Committee surely has done—they can implement restrictions that hamper enterprises’ ability to create value for customers, and yet stay in business year after year. There is no process in government regulation for getting rid of a bad regulator, or for rejecting bad regulations.