"Regulation" is a polite word, so it's easy to lose track of what it really means. But what it really means is policing. Contrary to what the Republicans tell you, ours is not a planned economy in which government bureaucrats are making operational decisions. This isn't the Soviet Union, and they don't exist to govern the allocation of the shoe supply. Generally speaking, regulations is capitalist economies are about limiting the otherwise limitless appetite for profit by imposing extraordinarily high costs on harmful, reckless, and otherwise predatory behavior.
If regulators want to retain outside consultants from an industry that's one thing - especially if the people they're hiring are whistleblowers who can be relied on to have no further employment with the people they busted. It's when industry starts hiring ex-regulators that things get really sticky.