For many years, the U.S. regulatory system has been hampered by the excessive influence large corporations and trade associations exercise over the agencies. Critics call this regulatory capture.
With its sweeping new ruling establishing the right of the president to fire agency commissioners at will, the Supreme Court has created another impediment to effective oversight of business. Let’s call it presidential capture.
In theory, giving the White House absolute control over the leadership of the agencies could be a good thing—if the President in office strongly believed in curbing corporate abuses. That is far from the case with regard to the current occupant of the Oval Office. Trump regards the regulatory agencies the same way he views the Justice Department—as a means to reward his friends and punish his perceived enemies. The rewards include deregulatory policies such as severe cutbacks in environmental protection, while the punishments include moves such as the FCC’s threats to rescind the licenses of television networks that don’t adhere to MAGA ideology.
From the point of view of corporate accountability, now is the worst possible time to give the president more power over regulation. For all of their limitations, the formerly independent agencies have engaged in a significant amount of enforcement. My colleagues and I have been documenting those efforts in Violation Tracker. Here are some highlights of the track records of the major agencies now effectively under Trump’s thumb.
Securities and Exchange Commission. Created in 1934, the SEC oversees securities markets and protects investors. Among other things, it helps to enforce the Foreign Corrupt Practices Act. For the period from 2000 to the present, Violation Tracker documents more than 3,000 successful enforcement actions against companies, with total penalties of $45 billion. For example, in 2020 Wells Fargo paid a penalty of $500 million in connection with the bogus bank accounts scandal.
Federal Trade Commission. With responsibilities relating to consumer protection and merger oversight, the FTC, created in 1914, has completed more than 600 successful enforcement actions against companies since 2000, collecting $19 billion in penalties. Among its biggest cases was a $5 billion penalty imposed on Facebook in 2019 for deceiving users about its privacy policies.
Environmental Protection Agency. Created in 1970, the EPA is charged with enforcing laws such as the Clean Air Act and the Clean Water Act. Since 2000, it has collected more than $70 billion in penalties from some 22,000 enforcement actions. Among its most significant cases was a $14 billion settlement in 2016 with Volkswagen relating to allegations that the automaker rigged emissions tests to deceive regulators and the public about the amount of pollution generated by its vehicles.
National Labor Relations Board. Established in 1935, the role of the NLRB is to safeguard the right of workers to organize and to remedy unfair labor practices. Violation Tracker documents only those cases in which an employer agreed to provide back pay to workers improperly fired for union activity. Not all of these agreements are made public. The database contains data on more than 14,000 cases in which $1.7 billion in back pay was disclosed. The largest case involved a $130 million payment by Alcatel-Lucent, now Nokia, in 2001.
There are a couple of dozen other entities that were set up as independent agencies whose independence has now been obliterated by the Supreme Court. One notable exception is the Federal Reserve, which it is worth noting is not only the country’s central bank but also one of the agencies that regulate banks.
The Fed oversees bank holding companies and some state-chartered banks. Since 2000, the Fed has brought some 185 successful enforcement actions against such banks, collecting over $7 billion in penalties. For example, in 2015 the Fed imposed $1.8 billion in fines on six major banks for abuses relating to foreign exchange markets.
The Supreme Court’s decision to prevent Trump from ousting Fed governor Lisa Cook on the same day it established the president’s right to fire commissioners at will at every other regulatory agency shows the arbitrary nature of the Court’s action.
SCOTUS’s effective abolition of independent regulatory agencies is less a victory for Trump than it is the culmination of a decades-long effort to consolidate presidential control of the executive branch, in part to protect the interests of big business. The Right may be celebrating now, but it may later come to regret its success. If the country ever elects a truly progressive president, the tables will be turned and it will be a lot easier to hold corporations to account.
You must be logged in to post a comment.