I think of regulation as a constant negotiation between the regulators and the regulated industry. By putting measures in place to bar those with industry experience from working at the regulators you are decreasing the information available to the regulators.

The decrease in information directly decreases the regulators negotiating power, leading to greater regulatory capture.

Would this be more than regulatory capture caused by the revolving door? I don't know - but it does swing both ways.

Exactly.

Well intentioned people if incompetent at worst accomplish nothing and if competent do great things. However, ill-intentioned people if incompetent accomplish nothing and if competent can do massive amounts of irreversible damage.