Since the days of Franklin Roosevelt, Washington has been littered with supposedly independent agencies that exist solely for the purpose of regulating sectors of the U.S. economy.
These agencies act based on the votes taken by the boards that oversee them, whose members and chairman are nominated by the president and confirmed by the U.S. Senate. By law, they are officially bipartisan; their terms are fixed, and for the sake of appearance, they are considered independent.
The brain trust that conceived them envisioned them as independent regulatory bodies that would impose and enforce regulations outlined in legislation, free from political pressure from the executive. That was the theory anyway.
The facts are very different. These agencies, which include the Federal Communications Commission, the Federal Trade Commission, and the Securities and Exchange Commission, are heavily lobbied. Outsiders spend millions each year to influence their actions. Their decisions, which are often litigated, can significantly impact or even make or break companies and industries.
Some of that may be changing because of initiatives President Donald Trump has taken to challenge the ruling in Humphrey’s Executor, a relatively obscure 1935 U.S. Supreme Court decision that held presidential appointees to these commissions cannot be removed from their posts over policy disputes.
This so-called independence broke the thread of accountability crucial to the system of checks and balances inherent in the government’s structure. It has led to an infestation of unelected bureaucrats accountable to no one who wield virtually unchecked power over our lives, liberty, and happiness. They define their role as keeping things on course, no matter what, often defying the political appointees working to fulfill the mandate for change that the American people give a newly elected president.
This is certainly true for Trump, whose criticism of what he calls the “Deep State” and its efforts to prevent him from enacting his agenda has been voluminous. At this point, the only real choice he has is to replace as many appointees as he can get the Senate to confirm.
That will change policy, but, remarkably, the GOP-controlled United States Senate has been slow to act. Some of this can be attributed to the Democrats, who have used every procedural trick available to them to slow the pace of confirmations. But it’s South Dakota Republican John Thune who controls the floor and sets the agenda for the day.
One person who has made it through, thankfully, is Paul Atkins, whom the president nominated to lead the United States Securities and Exchange Commission. Under the Joe Biden-era Chairman Gary Gensler, the Commission repeatedly overstepped its authority by attempting to regulate the financial markets through dubious enforcement activities.
Under Atkins, who previously served as a member of the SEC, all that will stop. He’ll ensure the best practices approach keeps the commission on point, fulfilling its purpose as described by law: “facilitate capital formation; maintain fair, orderly, and efficient markets; and protect investors.”
That’s a welcome clarification of responsibility. Gensler often reached beyond his agency’s grasp, as when he tried to regulate the market for precious metals. Gold and silver are not securities. Neither are individual retirement accounts. Under him, the SEC attempted to claim authority over companies that offered precious metals IRAs to individuals and families seeking to own gold and silver.
The Committee on Capital Markets Regulation’s John Gulliver told the House Financial Services Committee in March of 2024 that, under Gensler, the SEC had “an unprecedented rulemaking agenda that will radically redesign the regulation of our securities markets and will have a major impact on the cost of being a public company and investing in our markets.”
The overreach matters. The United States is in a race with China for cryptocurrency dominance. The winner gets to establish the terms under which everyone else must live. It’s no surprise that the SEC’s failure to establish what economist David Burton called “basic rules for responsible actors to follow” undermines America’s ability to take the lead.
Regulation by enforcement threatens innovation. It inhibits growth and is detrimental to the U.S. economy. On this point, Atkins can only do so much. Congress must act, explicitly prohibiting the use of “regulation by enforcement” to gain authority over emerging markets and financial technologies that the legislature does not wish the agency to have.
The American investor class, which thanks to IRAs and other private retirement accounts gets bigger by the day, needs certainty not speculation in its regulatory environment. If reform means growing the economy rather than the bureaucracy, Paul Atkins is the right man for the job.
