US President Donald Trump sought to rein in independent federal agencies in an executive order Tuesday that seeks to curb the ability of some of Washington’s most powerful regulators to oversee banks and other companies.
The order, which applies to agencies including the US Securities and Exchange Commission, the Federal Trade Commission and the Federal Communications Commission, calls for the entities to submit draft regulations for White House review before publication and consult with the Trump administration on their priorities and strategic plans.
Independent agencies have frequently followed directives from the White House, but their mandates don’t require them to do so. This order would change that requirement — and has the potential to draw legal challenges from the agencies.
“Previous administrations have allowed so-called ‘independent regulatory agencies’ to operate with minimal Presidential supervision,” according to the order Trump signed Tuesday. “These regulatory agencies currently exercise substantial executive authority without sufficient accountability to the President, and through him, to the American people.”
The directive is Trump’s latest attempt to clamp down on the power of agencies. The president has sought to appoint loyalists to key administration jobs. Elon Musk, a close Trump confidant involved with the Department of Government Efficiency’s cost-cutting effort, has embedded allies across the federal government to identify spending cuts and staff to terminate.
Independent agencies are designed to have a degree of separation from the White House, said James Angel, an associate finance professor at Georgetown University.
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At the SEC, for example, no more than three of its five commissioners are allowed to be from the same party. Those members have staggered terms and the appointments are not designed to be part of the “political spoils system”.
“Congress set up these specialist agencies for very good reason,” Angel said. “They are designed to be technical experts run by a bipartisan group that would be slightly isolated from the whims of the current president.”
The order does exempt the US Federal Reserve’s Board of Governors and the Federal Open Market Committee’s work on monetary policy from the additional oversight. The order, however, specifies that the Fed’s Board of Governors will need to comply on issues related to “its supervision and regulation of financial institutions”.
