WASHINGTON — President Donald Trump has initiated efforts to place independent federal regulatory bodies such as the Securities and Exchange Commission, the Federal Trade Commission, and the Federal Communications Commission under direct presidential oversight.
A recent executive order signed by Trump enhances the president’s authority to influence the governance of the financial sector while also defining regulations related to transportation safety, consumer protection, and various communication technologies including wireless, broadcast, satellite, and broadband.
This directive is part of a wider strategy by the Trump administration to assert increased control over federal operations, which may restrict the allocation of funds approved by Congress in a manner that could provoke legal challenges and prompt judicial involvement.
Historically, prior administrations believed that having independent regulators was beneficial to long-term national interests, allowing for a level of operation free from day-to-day political interference. Presidents traditionally exercised indirect influence by choosing individuals to head these agencies, without requiring them to present strategic plans to the White House that could risk their funding.
Nonetheless, the Trump administration argues that such independent authorities might obstruct the president’s initiatives and the interests of the electorate. The signed order emphasizes that “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.”
Critics have voiced concerns that this move could breed potential overreach by the Trump administration. “This action will serve only to politicize and corrupt independent agencies, which will now be subject to the political whims of those in power,” stated Alexandra Reeve Givens, the CEO of the Center for Democracy & Technology, a well-known nonprofit organization. She emphasized the importance of maintaining these agencies’ independence, highlighting that they have been designed to interpret laws and conduct investigations without political bias for over a century.
The establishment of independent agencies can be traced back to 1887 with the formation of the Independent Commerce Commission, which was initially convened to regulate railroad monopolies and their pricing. This format has led to the creation of numerous regulatory bodies that are overseen through presidential appointments and congressional scrutiny.
Roger Nober, a George Washington University professor and director of the GW Regulator Studies Center, described the executive order as “very significant.” He noted that it exceeds current regulations, which already mandate that any regulatory measures likely to impact the economy by over $100 million undergo a review by the White House Office of Management and Budget.
Nober remarked that this directive’s primary aim appears to be a substantial reduction in the autonomy of these independent regulatory bodies. While he acknowledges that Trump may wish to exert more control over agencies like the SEC, he questions whether this approach truly fosters accountability in these independent organizations.
The executive order addresses the regulatory functions of the Federal Reserve, yet it preserves its autonomy regarding the establishment of short-term interest rates, which can significantly affect inflation and employment levels. A spokesperson for the Federal Reserve declined to provide comments regarding the executive order on Wednesday.
In the immediate term, the order may have limited practical implications, particularly due to imminent transitions within the Federal Reserve. The vice chair for supervision, Michael Barr, a Biden appointee, is expected to leave his position on February 28. Furthermore, the Federal Reserve announced that it would hold off on significant rulemaking until Barr’s replacement has been appointed.
Ian Katz, an analyst associated with the policy research firm Capital Alpha, posits that a legal challenge may be one of the intended outcomes of the order. He indicated that the White House, alongside conservative colleagues, anticipates legal scrutiny of the executive order, aspiring for a Supreme Court ruling that might further confirm executive authority over these bodies.
According to the order, the White House Office of Management and Budget will be responsible for setting performance standards and management objectives for the leadership of independent agencies. The OMB will also have the authority to adjust funding allocated to these agencies based on various factors that may conflict with the president’s objectives.
Additionally, the leaders of independent agencies will be required to have special liaisons at the White House to facilitate coordination with presidential advisors and aides.
