If this were true, food companies wouldn’t have a Regulatory team. Except every single one of them does, and they function similarly to how you describe, but without dissolving. They’re treated as a constraint that must be checked before major projects can advance. Sometimes they’re the longest-lead item on a new project and if you don’t get them involved early, your project can sink at a late stage after great expense.

The only difference is AI isn’t regulated, so they just have a vague “ethics” department with no real teeth because it’s essentially PR and has no legal consequences to back up their stance.