I think we need laws stating that anyone who has ever worked for an industry, and their immediate families and their known business associates, is not allowed to work in any capacity for a regulating agency, and vice-versa.
The downside to this idea is that you would be left with pretty much only two groups of people available for a regulatory agency: people who don't know anything about the field that the agency is responsible for, and new graduates whose only knowledge of the field is from their time in college. The FCC needs people with telecommunications knowledge, the EPA needs ecologists and chemists, etc. If you disallow anyone who has worked in the industry, you aren't left with much.
So what's the right answer? Damned if I know.