The so-called "Stanford yacht scandal" is used as a case to examine the public policy origins of bureaucratic red tape. The 1988 erroneous charge by Stanford University accountants of depreciation of the university Yacht to federal research accounts resulted in disastrous audits and then changes to U.S. research policies that adversely affect research universities. The seeds of red tape and organizational disaster were planted in ill-designed public policies and then exacerbated by Stanford officials’ missteps. Overcompliance, misplaced precision, and overcontrol are causes of red tape. A "convergent indicators" approach is offered to help judge when rules have become red tape.