I will freely admit my bias here – I have always been an independent agency fanboy.

To review the bidding, an independent agency is an entity that exists outside of the 15 executive departments and the Executive Office of the President, operating pursuant to statutory authority granted by Congress to serve some particularized mission that could be better carried out by a commission, agency or board that is shielded from direct political influence and the whims of the sitting President. While it is clear that the cabinet secretaries and their departments are always operating purely at the direction of the President, independent agencies enjoyed a certain level of detachment from the White House that, at least in my own view, allowed them to often pursue a more mission-focused agenda.

Now, don’t get me wrong, I recognize that the agenda of most “independent” agencies is set by a chairman or other leader who gets appointed by the President and is typically of the same political party as the President, so it is not like they are somehow magically above politics or not aligned with the White House’s overall agenda, but that veneer of “independence” afforded by their enabling statutes somehow has allowed many agencies to focus on their very particularized mission in what one might describe as a more objective manner with a longer-term perspective than the next presidential election.

Independent agencies actually predated the New Deal milieu in which the SEC was created, with Congress first establishing the Interstate Commerce Commission back in the 1880s for the purpose of regulating railroad rates. At that time, Congress thought that it was important to shield the ICC from the vagaries of politics so as to minimize the possibility of disruption. As this Economic Policy Institute paper notes:

Many additional independent agencies were created by Congress during the New Deal. It is commonly thought that these New Deal agencies were created to be independent because Congress wanted their decisionmaking to benefit from specialized expertise and—for several of these agencies—because they were tasked with performing adjudicative functions and, thus, were structured more like courts to preserve the integrity of the deliberative process and promote collaborative and consensus-based decisionmaking (Corrigan and Revesz 2017, 639).

During most of my time at the SEC, I observed this noble concept in action, and I was proud of it. As a federal agency with an important economic mandate, it would be insane to assert that the agency was somehow shielded from political pressure, and in fact we were continually bombarded by inquiries and cajoling from both the White House and the Hill; however, I rarely knew the political leanings of my colleagues, and typically the commissioners would approach issues from the perspective of the agency’s mission, rather than from the perspective of the current political climate. While some may accuse me of looking at my time at the agency through rose-colored glasses, I recall that I was always proud of how the agency operated so independently and with a laser-focus on its important mission in an increasingly politicized environment.

Note that my experience at the SEC was nearly twenty years ago, and toward the end of my tenure at the agency, the well-documented politicization of the SEC was becoming much more acute, and it has only gotten worse since then. Nonetheless, I am sad today to see the outcome of Trump v. Slaughter, because it will likely mean any last vestiges of the SEC’s independence will be lost, at least symbolically.

In the near term, there will obviously be no impact of the Supreme Court’s decision on the SEC, given that it is currently staffed with three Republican commissioners, going down to just two commissioners later this year. This means that there are no commissioners for the President to remove on policy grounds. Despite calls for the President to appoint Democratic commissioners to the SEC, it is likely that will not be a priority for the Administration going forward. So in terms of the SEC’s agenda, its rulemaking efforts and its enforcement efforts, yesterday’s decision will likely not change anything about how the SEC is operating in the current environment.

– Dave Lynn