The problem still exists. You want someone in charge of the SEC and Treasury who knows what he is doing, but you don't want him to have ties to other people who still work in the industry. How do you do that?
Good question. But you also have a situation where you have people making major money working for a private company, going into government service for a couple of years for comparative peanuts, and then go back to working for said private company. The entire time you have close friends and colleagues working for said private company.
You're a pilot. Suppose you were making a couple of million (or tens of millions) being a pilot. Some buddies pull some strings and offer you a cushy political job at the FAA. Unofficially you get a guarantee from a buddy you'll get a job as a pilot afterwards. If not your old job, something well paying. A lot, if not all, of your buddies work as pilots. Maybe you have family members working as pilots. During that time at the FAA, you have a scandal were pilots were doing something very illegal but not necessarily easy to prosecute. I mean, it can be done, but without you sharing pilot specific information to the FAA, they may have no idea how to prosecute these thousands of rogue pilots.
What do you do? Rock the boat, alienate every single friend you have, put your future paycheck in jeopardy and ensure virtually no airline would ever hire you again, but you'd have the possibility (not guarantee) that you'll put guilty people behind bars. Maybe with light sentences, probably walk free. Or do you hear no evil, see no evil, speak no evil, collect the govt check and then go back to being a pilot making millions. You have a family, kids and a mortgage. Your buddies have families, kids, mortgages. You know them. You've been to their house.
What do you do? Protect your buddies, your future job? Or throw all of that way to MAYBE get some of your buddies put behind bars?
Not saying this as a dodge. It's still a perfectly valid situation. But you need to find experts that aren't significantly incentivized to ignore illegal behavior.
Current roster of Goldman Sachs folks directly moving over are Secretary of the Treasury Steve Mnuchin, National Economic Council Director Gary Cohn and Securities and Exchange Commission Chair is Jay Clayton (one of Goldman Sachs' lawyers). Slightly less than a dozen other Goldman Sachs folks becoming advisors. I would agree that it would be excessive to beat up on one company, except I think it's slightly weird for folks from ONE company holding so many top level positions. Ignoring even previous administrations (of both parties), that statistical distribution is very very off.
I'm far from being anti-capitalism. Far from it, I'm worried about capitalism being corrupted by individuals abusing their government positions for personal gain.