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While Elon Musk’s DOGE claims the spotlight, President Donald Trump is separately pushing to bring multiple independent regulators under his control — as legal experts warn the Federal Reserve could get swept in.
The Justice Department told Senate Democrats earlier this month that it will not defend long-standing safeguards that prevent the president from firing the heads of “multi-member regulatory commissions” without cause. Several days later, Trump signed an executive order that directed all independent agencies to run proposed regulations by the White House.
Legal experts describe the twin moves as a coordinated campaign to concentrate power in the executive branch, with potentially sweeping ramifications for agencies that have operated for decades with some distance from the White House. And with GOP lawmakers lining up behind the Trump administration, that push appears likely to succeed.
“They’re part of the executive branch — and they’ve got to be accountable to someone,” Sen. John Kennedy, R-La., told Semafor of independent agencies. “They’re sure not accountable to Congress. They ignore us.”
At the heart of the Trump administration’s plans is a request that the Supreme Court revisit Humphrey’s Executor, a 90-year-old ruling that requires cause before a president can fire members of most independent regulatory agencies. And that bid to overturn Humphrey’s may succeed, given that the high court chipped away at the precedent in a 2020 ruling against protections for the Consumer Financial Protection Bureau’s leadership.
But legal experts say overturning Humphrey’s Executor would constrain every independent agency with multiple members — including the Federal Reserve, despite the administration’s attempt to carve out Fed monetary policy from its recent order. DOJ’s letter to senators referenced greater executive-branch control over the Federal Trade Commission, National Labor Relations Board, and Consumer Product Safety Commission.
“It seems like they don’t want to push the issue for the Federal Reserve in particular, because it seems like there’s a bipartisan consensus that having it de facto operate with some independence is good for stability,” said Thomas Berry, director of the Cato Institute’s Robert A. Levy Center for Constitutional Studies.
“But at the same time … if you overrule Humphrey’s Executor, I don’t see how you can carve out a rule that still allows the Federal Reserve to be different,” Berry added, calling it “the third rail.”
Trump’s executive order this month pointedly covered the Fed’s supervision of banks and other financial institutions while exempting its monetary policy decisions. Whether it’s possible to so narrowly preserve independent decision-making is another matter.
“As the saying goes, if you pick up one end of the stick, you pick up the other,” Peter Conti-Brown, professor at the Wharton School of the University of Pennsylvania, said. “The Fed is a single stick.”
Even if the Supreme Court does not overturn Humphrey’s, Conti-Brown added, Trump’s recent order “turns the relationship instead into one of subordination of the Fed to the White House.”
While Trump has said he doesn’t plan to try to replace Fed Chair Jerome Powell before his term expires next year, he repeatedly criticized the central bank’s decisions during his first term and recently “demanded” it cut interest rates.
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Conservative justices have lately taken issue with the Supreme Court’s decision in Humphrey’s: Justice Clarence Thomas called it “a direct threat to our constitutional structure” in 2020, and Justice Brett Kavanaugh has made clear he’s a fan of overturning the precedent.
On top of that, two opinions by Chief Justice John Roberts — in the CFPB case and a separate case on the Federal Housing Finance Agency — were “about as negative as you can be without overruling it,” Berry said.
“It’s that language that may put people on alert to say, ‘Oh, it looks like they’re setting the table to eventually overrule Humphrey’s Executor once a case is teed up where they would have no choice,’” Berry said.
While there’s no clear path for the high court to overturn Humphrey’s yet, Trump has recently ousted several members of independent regulatory agencies, including former National Labor Relations Board Chair Gwynne Wilcox. Legal challenges to those removals could make their way to the Supreme Court, setting up a battle over Humphrey’s.
The White House did not return a request for comment for this story.
The View From Democrats
Top Democrats like Sen. Elizabeth Warren, D-Mass., are already warning that Trump’s campaign for more power over independent regulators would have serious ramifications for financial stability.
“The cost is enormous,” Warren, the Senate Banking Committee’s top Democrat, told Semafor. “The independence of banking regulators has been part of our financial system since 1863 because we understand that it helps keep our economy more stable.”
Others were even more blunt.
“The system will break if [Roberts] overrules Humphrey’s Executor,” Sen. Richard Blumenthal, D-Conn., told Semafor. “This decision is really a stress test for him as chief justice in a profoundly significant constitutional sense.”
Without control of the House or Senate, Blumenthal and others are looking to Republicans to push back on what they describe as a drastic overreach — but they’re not optimistic.
“It’s one of those cases where Republicans also participate in creating a lot of these entities, so it puts them all at risk, and I would argue that it directly undermines Article One powers, so you would think Republicans would be concerned about another assault on Article One,” Sen. Chris Van Hollen, D-Md., told Semafor.
“So far, they’ve not shown many signs of life.”
Eleanor and Shelby’s View
While Trump might be within his power to seek an end to Humphrey’s, he’s also trying to have it both ways when it comes to the Fed. Though he’s projecting some respect for its independence by carving out monetary policy decisions from his order, he’s still soliciting firing power over the people making those decisions by targeting Humphrey’s.
(And that’s assuming he can, in fact, separate out monetary policy.)
Trump’s strategy also carries some risk when it comes to future administrations. Presidents exert a measure of control over independent agencies by appointing officials with defined terms.
If his White House claims the ability to make those changes immediately, the next Democratic president also gets that power — and can fire conservative regulators as soon as they take office.
Notable
- “Mr. Trump is trying to reorder the way large parts of the federal government have operated since the days of FDR,” the Wall Street Journal’s editorial board notes of the push to overturn Humphrey’s.
- SCOTUSBlog looked in depth at the 2020 case that ruled against protections for the director of the CFPB.