WASHINGTON — President Donald Trump is taking steps to increase the White House’s influence over independent federal regulatory bodies such as the Securities and Exchange Commission (SEC), the Federal Trade Commission (FTC), and the Federal Communications Commission (FCC).
On Tuesday, the president enacted an executive order, which empowers him to dictate the supervision of the financial landscape and set standards regarding transportation safety, essential consumer protections, as well as wireless, broadcast, satellite, and broadband communications.
This initiative is part of a broader strategy by the Trump administration to enhance its control over government operations, potentially limiting how congressionally approved funds can be utilized, which could trigger legal disputes and prompt judicial scrutiny.
Historically, previous administrations recognized the value of having independent regulators that function in the long-term interests of the nation, free from daily political pressures. While presidents could informally guide these agencies through strategic appointments, they were not mandated to submit their plans to the White House, thus preserving their essential autonomy and access to funding.
The Trump administration argues that these independent regulators could pose a risk to the president’s agenda and disregard public sentiment. “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 signed order stated.
However, this move has faced backlash, with critics suggesting that it could pave the way for governmental overreach and misuse of power. Alexandra Reeve Givens, CEO of the Center for Democracy & Technology, expressed concern, stating, “This action will only politicize and corrupt independent agencies, which will now be subject to the political whims of those in power. For a century, these agencies have been independent for a reason — Congress needs these experts to interpret the laws it passes, and to initiate investigations and enforce those laws without political favoritism.”
The concept of independent agencies dates back to 1887 with the establishment of the Interstate Commerce Commission to manage railroad monopolies and their fare structures. Following this framework, many regulatory bodies were formed, governed by presidential appointments and congressional oversight.
Roger Nober, a professor at George Washington University and director of the GW Regulatory Studies Center, indicated that the executive order is “very significant” as it extends beyond existing protocols that require any regulation with an economic effect of over $100 million to receive a review from the White House Office of Management and Budget (OMB).
Nober noted that while he understands why Trump might want more oversight over stock market regulators like the SEC, he expressed doubts about whether this approach will be effective in the long haul for ensuring that independent agencies are politically accountable.
The executive order also addresses the Federal Reserve’s regulatory functions but stipulates that its autonomy related to setting short-term interest rates influencing inflation and employment should remain intact. A representative from the Fed refrained from commenting on the order.
In the immediate future, the order might have limited practical implications. The Fed’s vice chair for supervision, Michael Barr, a Biden appointee, announced last month he would resign in February, and the Fed has indicated it will halt any significant rulemaking until a successor is confirmed.
Peter Conti-Brown, a finance professor and historian at the Wharton School at the University of Pennsylvania, characterized the executive order as a substantial shift in the relationship between the Fed and the White House. Currently, while the White House, with the Senate’s approval, appoints the top regulatory official at the Fed and coordinates efforts, the new order appears to foster a framework of subordination rather than mere collaboration.
Analyst Ian Katz from Capital Alpha pointed out that one of the underlying objectives of Trump’s order may involve seeking legal challenges. “The White House and conservatives not only expect, but want, legal challenges to the executive order,” he noted. “They would like a Supreme Court ruling that further establishes executive branch authority over the agencies.”
As per the order, the OMB would be responsible for establishing performance metrics and objectives for independent agency heads. Additionally, it could alter the budget allocated to these agencies based on activities that appear to conflict with the presidential agenda. The heads of these agencies will also be required to have special liaisons from the White House to facilitate communication with the president’s aides and advisors.
