WASHINGTON — President Donald Trump is taking steps to bring independent federal regulators, including the Securities and Exchange Commission, the Federal Trade Commission, and the Federal Communications Commission, under more direct oversight from the White House.
On Tuesday, Trump signed an executive order that enhances presidential authority regarding the financial system’s management and establishes standards for transportation safety, consumer protections, and various communication methods such as wireless, broadcast, satellite, and broadband services.
This initiative is part of a broader effort by the Trump administration to exert greater control over federal agencies, a move that could restrict how congressionally allocated funds are utilized. Such restrictions might result in legal disputes, prompting court evaluations of the administration’s decisions.
Historically, previous administrations valued the independence of regulatory bodies, allowing them to focus on long-term national interests without direct political influence. Presidents could still shape these organizations through strategic appointments, avoiding mandatory reporting of plans that could affect their access to federal funding.
However, the Trump administration argues that independent regulators could interfere with the president’s objectives and the desires of the electorate. The executive order asserts 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 raised alarms that this change risks politicizing independent agencies, placing them at the mercy of those in power. Alexandra Reeve Givens, CEO of the Center for Democracy & Technology, expressed concern, stating, “This action will serve only to politicize and corrupt independent agencies, which will now be subject to the political whims of those in power.” She emphasized that for over a century, these agencies have operated independently for specific reasons, allowing Congress to rely on experts for law interpretation and enforcement untainted by political biases.
The concept of independent agencies dates back to 1887 with the establishment of the Independent Commerce Commission, initially created to address railroad monopolies and their pricing practices. This framework has since inspired the formation of various regulatory bodies, which function under presidential appointments and Congressional oversight.
Roger Nober, a George Washington University professor and director of the GW Regulator Studies Center, described the executive order as “very significant,” noting that it surpasses previous expectations regarding the review of regulations with considerable economic effects. Nober, who previously chaired the U.S. Surface Transportation Board during George W. Bush’s presidency, remarked, “The intent of this is to significantly scale back the independence of independent regulatory agencies.” While he acknowledged the rationale behind increasing control over agencies like the SEC, he questioned whether such a strategy would ultimately lead to greater accountability for independent agencies in the long run.
The new order also encompasses the Federal Reserve’s regulatory duties, yet preserves its autonomy in determining short-term interest rates that affect inflation and employment. A spokesperson from the Fed opted not to comment on the executive order.
In the immediate future, the practical implications of the order may be limited. Michael Barr, the Fed’s vice chair for supervision appointed by President Biden, announced he would step down at the end of February, and the Fed has indicated it will suspend significant rule-making until Barr’s successor is confirmed.
Ian Katz, an analyst at policy research firm Capital Alpha, suggested that a legal challenge might be part of the administration’s strategy with this order. He indicated in an email that the administration “not only expects but wants legal challenges to the executive order,” aiming for a Supreme Court ruling to reinforce the executive branch’s authority over independent agencies.
As per the executive order, the White House Office of Management and Budget (OMB) is tasked with setting performance standards and management goals for independent agency heads. The OMB could alter the funding assigned to these agencies depending on activities, functions, or projects that clash with the president’s agenda. Furthermore, agency leaders would require special White House liaisons to facilitate coordination with the administration’s aides and advisers.
