A new executive order signed by President Donald Trump on Tuesday gives him unprecedented control over independent regulators such as the Securities and Exchange Commission (SEC), the Federal Deposit Insurance Corp. (FDIC) and the Federal Trade Commission (FTC).
The executive order stipulates that independent regulatory agencies must submit any new proposed regulations to the White House for review before it can be published in the Federal Register. The move, if permitted, would give Trump greater control over decisions, budgets and leadership at some of the nation’s most important oversight bodies, even as Congress and Trump’s predecessors have determined them to be independent.
The Tuesday executive order, known as “Ensuring Accountability for All Agencies,” does not include the Federal Reserve system or the Federal Open Markets Committee‘s monetary policy prerogatives. But it does apply to the Fed in connection with its supervision and regulation of financial institutions.
The White House has already said that Trump has the authority to sharply cut the federal workforce, gut programs and systematically eliminate agencies without congressional approval. Federal judges have blocked some of the moves in recent weeks, and several key court battles loom in early March.
On Wednesday, The Washington Post and Punchbowl News reported that former Federal Housing Finance Agency Director Mark Calabria would join the Consumer Financial Protection Bureau (CFPB) and serve in a key role until Jonathan McKernan is confirmed by the Senate. Calabria is also working under the White House Office of Management and Budget (OMB), according to the Post.
Washington Post reporter Andrew Ackerman tweeted Wednesday that he had “heard [Calabria] has been charged with bringing all the independent agencies into the OMB.” That’s a reference to Trump’s executive order on Tuesday that seeks to “rein in” all the independent agencies under his more direct control.
Sarah Binder, a professor of politics at George Washington University and a senior fellow at the liberal think tank Brookings Institution, told NPR that she expects the “Ensuring Accountability for All Agencies” EO to wind up in the federal courts. But the action could also create swings in the economy, she said.
“It will make it harder for the Fed to keep its eyes on and try to control inflation, which still isn’t down to its 2% target, but also some general sense of financial stability that banks are being regulated across the board, big banks, small banks, community banks, but evenhandedly,” Binder said.
“And I think whenever you have some stronger tinge of presidential control, people are going to wonder, like, ‘Is that a legitimate exercise of power? Am I better off? Do I know what’s going to happen in the future?’ And certainly, in an economic realm, that’s put at risk by injecting presidential and partisan interests into the decision-making of these agencies.”
The FHFA was once considered an independent agency, but a June 2021 Supreme Court ruling changed this structure by making the agency subject to the control of the executive branch. In effect, it is managed by the White House’s National Economic Council.
