But experience and extensive research shows that regulatory capture also occurs in less tangible ways, when close contact and familiarity between individuals leads those enforcing the rules to sympathize with those they oversee. Whatever the source, the risk of regulatory capture is something the Federal Reserve takes very seriously and works very hard to prevent.
As the current servicing issues began to emerge more clearly, the Federal Reserve and other federal banking agencies initiated an in-depth review of practices at the largest mortgage servicing operations. The review focuses on foreclosure practices generally, but with a concentration on the breakdowns that seem to have led to inaccurate affidavits and other questionable legal documents being used in the foreclosure process.