WASHINGTON — President Trump is taking steps to place independent federal regulatory bodies like the Securities and Exchange Commission (SEC), the Federal Trade Commission (FTC), and the Federal Communications Commission (FCC) under direct White House authority.
An executive order signed on Tuesday expands the president’s powers, enabling a more hands-on approach in overseeing the financial system and establishing guidelines for transportation safety, essential consumer protections, and communications through wireless, broadcasting, satellite, and broadband channels.
This initiative is part of a wider strategy by the Trump administration to enhance control over federal operations while possibly constraining how congressionally allocated funds are employed, potentially leading to legal disputes and court interventions.
Historically, previous administrations recognized the need for independent regulators that could prioritize the nation’s long-term interests devoid of political pressures. Prior to this, presidents guided agency leadership through appointments without mandating strategic plans to be submitted to the White House, which could jeopardize funding avenues as defined by the new regulation.
The Trump administration argues that maintaining independent regulators could stifle the president’s objectives and the preferences of the electorate. The order states that “for the Federal Government to be genuinely accountable to the American people, officials wielding extensive executive power must be supervised and controlled by the elected President.”
This action has faced backlash, with critics warning of potential overreach that could politicize independent agencies. Alexandra Reeve Givens, CEO of the Center for Democracy & Technology, remarked that such a move would subject these agencies to the unpredictable whims of the current political leadership. She emphasized that for a century, these bodies have operated independently for a valid reason—Congress relies on their expertise to interpret laws and carry out investigations free from political bias.
The concept of independent agencies dates back to 1887 with the establishment of the Interstate Commerce Commission, which initially sought to regulate railroad monopolies. Additional regulatory bodies emerged under a similar framework, functioning with presidential appointments alongside oversight from Congress.
Roger Nober, a professor from George Washington University and director of its Regulatory Studies Center, characterized the executive order as “very significant.” The directive surpasses existing stipulations that require any significant regulatory measures that impact the economy by over $100 million to undergo assessment by the White House’s Office of Management and Budget (OMB).
Nober acknowledged that while it may make sense for Trump to exert greater control over a stock market regulator like the SEC, it remains to be seen if this strategy will ultimately prove beneficial for ensuring accountability among independent agencies in the future.
The executive order also encompasses the regulatory duties of the Federal Reserve but notably preserves its autonomy in determining short-term interest rates that affect inflation and employment rates. A spokesperson from the Fed declined to comment on the tome surrounding the new order.
In the short run, the practical impacts of the order might be limited. The Fed’s vice chair for supervision, Michael Barr, who was appointed by President Biden, has announced he will resign on February 28, 2024. Additionally, the Fed has indicated it will halt any substantial rulemaking until Barr’s replacement is confirmed.
According to Ian Katz, an analyst with Capital Alpha, a judicial challenge might be one of the anticipated outcomes of the order. He suggested that the administration and its allies expect and desire legal confrontations over the directive. “They aim for a Supreme Court verdict that reinforces executive power over these agencies,” Katz noted in an email.
Under the new order, the OMB would define performance measures and management goals for the directors of independent agencies. It could also alter the funding allocated to these agencies based on specific activities or objectives that may conflict with the president’s agenda.
Furthermore, leaders of independent agencies will be required to appoint special liaisons to facilitate coordination with White House personnel and advisors.
