WASHINGTON — President Donald Trump is taking steps to place independent federal regulators, including the Securities and Exchange Commission, the Federal Trade Commission, and the Federal Communications Commission, under direct control of the White House.
On Tuesday, Trump signed an executive order that grants the president increased authority over federal regulatory oversight, impacting areas such as the financial system, transportation safety, consumer protections, as well as wireless, broadcast, satellite, and broadband communications.
This action is part of a wider effort by the Trump administration to strengthen its control over government operations, which could potentially restrict the use of congressionally approved funds, leading to the possibility of litigation and judicial involvement.
Previous administrations valued the role of independent regulators, believing they could focus on the long-term welfare of the country without political interference. While presidents historically influenced these agencies through appointments, these agencies did not have to seek approval from the White House for strategic plans, thus maintaining their operational autonomy.
However, the Trump administration argues that independent regulators might impede the president’s goals and the people’s mandate. “For the Federal Government to be truly accountable to the American people, officials who wield vast executive power must be supervised and controlled by the people’s elected President,” the executive order notes.
This initiative has faced backlash, with critics warning it could lead to potential misconduct within the administration. Alexandra Reeve Givens, CEO of the Center for Democracy & Technology, expressed concern that such moves politicize and compromise independent agencies, which have been structured for nearly a century to operate without political influence.
The origins of independent regulatory agencies date back to 1887, starting with the formation of the Independent Commerce Commission aimed at regulating railroad monopolies. Since then, multiple agencies have been created under similar frameworks, relying on presidential appointments and congressional oversight for their operations.
Roger Nober, a George Washington University professor and director of the GW Regulator Studies Center, described the executive order as “very significant.” The directive extends past existing rules requiring that regulations with substantial economic implications undergo scrutiny from the White House Office of Management and Budget.
Nober acknowledged that there may be rationale behind Trump’s desire to assert greater oversight over agencies like the SEC. Nonetheless, he indicated the necessity to evaluate whether this approach would ultimately enhance the accountability of independent agencies in the long run.
Although the executive order touches upon the responsibilities of the Federal Reserve, it notably preserves its autonomy in determining short-term interest rates that can impact inflation and employment. A spokesperson for the Fed declined to comment on the executive order.
In the near term, the order might have limited practical implications. Michael Barr, the Fed’s vice chair for supervision and a Biden appointee, announced he would step down at the end of February. Additionally, the Fed has committed to pausing significant rulemaking until a successor is confirmed.
Analyst Ian Katz from Capital Alpha suspects that a court challenge is among the aims of this executive order. He believes the administration and conservative groups are not just anticipating but also desiring legal contests that could solidify executive branch authority over regulatory agencies.
Under the new directive, the White House Office of Management and Budget will establish performance metrics and management goals for independent agency leaders. Furthermore, the OMB may adjust funding allocations based on agency activities that could clash with presidential agendas.
Heads of independent agencies will be required to have dedicated White House liaisons to ensure coordination with the president’s staff and advisors.
