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WASHINGTON (AP) — President Donald Trump is moving to give the White House direct control of independent federal regulators such as the Securities and Exchange Commission, the Federal Trade Commission and the Federal Communications Commission.
The executive order that Trump signed Tuesday gives the president more power to shape the oversight of the financial system and lay out criteria for transportation safety, basic consumer protections and wireless, broadcast, satellite and broadband communications.
It is part of a broader push by the Trump administration to assert greater authority over the government, possibly limiting the spending of congressionally approved funds in ways that could set up lawsuits and lead courts to weigh in.
Past administrations saw public benefit in having regulators that could operate in the long-term interests of the country without the daily machinations of politics. Presidents could exercise informal control by whom they appointed to lead the agencies without necessarily requiring those agencies to submit strategic plans to the White House and lose access to funding initiatives as the order lays out.
But the Trump White House maintains that independent regulators could undermine the president’s agenda and the will of the voting public.
“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,” said the order signed by Trump.
The move generated criticism that it could ultimately lead to abuses 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,” said Alexandra Reeve Givens, CEO of the nonprofit Center for Democracy & Technology. “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.”
Independent agencies go back to 1887 with the creation of the Interstate Commerce Commission, which initially existed to deal with railroad monopolies and the rates they charged. Multiple other regulators were built on this format and operated through presidential appointments and congressional oversight.
Roger Nober, a professor at George Washington University and director of the GW Regulator Studies Center, called the order “very significant.” The rule goes beyond existing requirements that regulations with an economic impact of more than $100 million or more go through a review by the White House Office of Management and Budget.
“The intent of this is to significantly scale back the independence of independent regulatory agencies,” said Nober, who was previously chair of the U.S. Surface Transportation Board, an independent regulator, during George W. Bush’s presidency.
Nober stressed that he could understand why Trump might wish to bring a stock market regulator such as the SEC under greater White House control. But, he said, “we’ll have to see if this is the right approach in the long run to make independent agencies more politically responsible.”
The executive order covers the regulatory responsibilities of the Federal Reserve, but it would specifically keep its independence on setting short-term interest rates that can influence inflation rates and employment levels.
A Fed spokesperson declined to comment Wednesday on the executive order.
The order may have only a limited practical effect, at least in the short term. The Fed’s vice chair for supervision, Michael Barr, a Biden appointee, said last month that he would step down Feb. 28. The Fed also said it would pause any major rulemaking until Barr’s successor is confirmed.
Peter Conti-Brown, a finance professor and Fed historian at the University of Pennsylvania’s Wharton Business School, said the executive order represents a major change in the way the Fed and White House interact.
Currently, the White House — with the Senate’s consent — fills the top regulator post at the Fed and can coordinate with that regulator. But the order “would substantially alter this status quo by formalizing subordination, not coordination, between the White House and the Fed.”
One of the ultimate goals of Trump’s new order might be a court challenge, said Ian Katz, an analyst at the policy research firm Capital Alpha.
“The White House and conservatives not only expect, but want, legal challenges to the executive order,” Katz wrote in an email. “They would like a Supreme Court ruling that further solidifies executive branch authority over the agencies.”
Under the order, the White House Office of Management and Budget would set performance standards and management objectives for the heads of independent agencies. The OMB could also change the funding apportioned to the agencies based on “activity, function, project, or object” that might be in conflict with the president’s agenda.
The heads of independent agencies would need to have special White House liaisons to coordinate with the president’s aides and advisers.
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Associated Press economics writer Christopher Rugaber in Washington contributed to this report.
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