{"id":290794,"date":"2025-06-13T12:22:51","date_gmt":"2025-06-13T12:22:51","guid":{"rendered":"https:\/\/peraltafinancing.com\/uncategorized\/dont-mourn-regulatory-independence-democracy-journal\/"},"modified":"2025-06-13T12:22:51","modified_gmt":"2025-06-13T12:22:51","slug":"dont-mourn-regulatory-independence-democracy-journal","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=290794","title":{"rendered":"Don\u2019t Mourn Regulatory Independence : Democracy Journal"},"content":{"rendered":"


\n<\/p>\n

\n

Amid the recent flurry of radical executive orders, one in particular has flown under the radar: President Trump has seized control over regulators like the Federal Deposit Insurance Corporation and the Securities and Exchange Commission, ending a century-old tradition that kept these financial watchdogs \u201cindependent\u201d from White House control.<\/p>\n

As former financial regulators, we are deeply concerned about what Trump\u2019s control of these agencies will mean for consumer protection and financial stability, let alone the potential for even more corrupt self-dealing. But the fundamental problem is not that Trump controls these agencies\u2014it is what he plans to do with that control. So as progressives start planning for when Trump eventually leaves office, we should not reflexively rush to restore the old system, where regulators were insulated from the White House.<\/p>\n

Why? Because that system was broken long before Trump shattered it.<\/p>\n

F<\/span>or over a century, America\u2019s financial regulators operated with \u201cindependence\u201d from the White House. The theory was simple: shielding these agencies from political pressure would let them use their technical expertise to keep bank deposits safe and fight financial fraud.<\/p>\n

That system ended with President Trump\u2019s recent executive order<\/a> bringing the agencies under direct White House control. Now Trump\u2014not Senate-confirmed regulators\u2014can decide who gets a bank charter, how much banks can charge in junk fees, and whether Big Tech companies may continue their unchecked expansion into finance. While the executive order sensibly exempts the Fed\u2019s interest rate-setting decisions, it purports to hand Trump personal control over virtually every other lever of financial power.<\/p>\n

Strangely, the finance industry has remained quiet about this dramatic power shift. Perhaps they fear retribution in an era when individual law firms<\/a> face illegal executive orders. Maybe they believe Trump\u2019s deregulatory agenda will benefit them. Or perhaps they\u2019re gambling that a future administration will restore the old \u201cnorms.\u201d<\/p>\n

They shouldn\u2019t bet on it.<\/p>\n

Those fighting for consumers, workers, and small businesses need to face a hard truth: Many independent regulators have consistently stymied efforts to ensure that banks fulfill their public mission rather than just pad Wall Street bonuses. We should not forget that the Comptroller of the Currency helped trigger the 2008 financial crisis by blocking state consumer protection laws\u2014and continues this anti-consumer agenda today. Or that the Federal Reserve and other bank regulators spent years delaying updates to anti-redlining laws, then produced regulations too weak to prevent banks from abandoning entire communities. Regulators have allowed our personal information to be harvested, sold, and exploited while our phones are bombarded with spam.<\/p>\n

The fact is, while these regulators may have been independent from the White House, they weren\u2019t from Wall Street and Silicon Valley. For decades, \u201cindependent\u201d financial regulators have repeatedly sided with powerful interests over ordinary Americans, even when Democrats controlled the White House. In the absence of presidential accountability, regulators came to view financial institutions\u2014not the American public\u2014as their clients.<\/p>\n

Now the metaphorical toothpaste is out of the tube, and progressives should finally put these powerful agencies to work building an economy that serves everyone\u2014not just the bankers and billionaires who enriched themselves under the old system. Instead of reflexively restoring a flawed system, we need a coordinated, whole-of-government approach to regulation with clear accountability. One that deploys every lever of government to function on behalf of working people from day one, and every day thereafter.<\/p>\n

Effective financial regulation often requires multiple agencies to act in lockstep. Without strong coordination, K Street lobbyists easily divide and conquer regulators, killing reforms before they start. Case in point: Fifteen years after Congress demanded limits on bankers\u2019 \u201cheads I win, tails you lose\u201d bonuses following the 2008 crash, five separate agencies still have not adopted a final rule\u2014while Wall Street compensation continues to soar.<\/p>\n

The formidable challenges ahead demand a unified approach: confronting too-big-to-fail banks that receive massive public subsidies with minimal public benefit; overseeing Big Tech companies that have poisoned market after market they\u2019ve entered; addressing a banking system that has abandoned rural communities, small farmers, and local business owners; and taming a digital economy built on ever-expanding surveillance and privacy intrusions.<\/p>\n

None of this happens by going back to a system where \u201cindependence\u201d was Washington, D.C. code for regulatory capture and special interest influence. That status quo let K Street lobbyists and revolving-door lawyers repeatedly derail presidents\u2019 pro-worker agendas. We cannot return to a system where regulators rush to fall in line with Republican presidents while claiming \u201cindependence\u201d when Democrats are in charge.<\/p>\n

The truth is that financial regulation often is not some technocratic science where experts can objectively find the \u201cright\u201d answer. These decisions involve fundamentally political tradeoffs. Should we limit bank dividends and bonuses, or should we let executives cash out while families lose their homes? The answer depends entirely on whether you are a bank executive collecting a massive payday or a working family worried about foreclosure. When regulators claim to be making \u201cindependent\u201d technical decisions, they are really just hiding whose interests they have chosen to prioritize.<\/p>\n

To be clear, we support maintaining Fed independence over interest rates decisions, which benefit<\/a> from insulation from political pressure. And we oppose key parts of Trump\u2019s order, like subjecting rules to quantitative cost-benefit analysis, which corporations routinely exploit to delay essential protections by inflating costs while downplaying benefits to the public.<\/p>\n

We also condemn Trump\u2019s firing of minority-party board members from these agencies. If the Supreme Court green-lights such purges by overturning decades of precedent\u2014as appears likely<\/a>\u2014Congress will need to redesign the agencies to ensure they have the tools and authorities needed to meet the significant challenges facing consumers, workers, and small businesses. But that\u2019s a fight for another day.<\/p>\n

When progressives are returned to power, they will face a choice: fight to restore a broken system that never worked for working people, or learn to use the centralized power Trump created. We believe they should maintain control over financial regulators and redirect these agencies toward consumer protection, fair markets, and financial stability. The alternative\u2014returning to a fragmented regulatory landscape where powerful interests easily block reform\u2014would be a grave mistake.<\/p>\n

The game has changed. It\u2019s time our strategy did too.<\/p>\n<\/p><\/div>\n\n","protected":false},"excerpt":{"rendered":"

Amid the recent flurry of radical executive orders, one in particular has flown under the radar: President Trump has seized control over regulators like the Federal Deposit Insurance Corporation and the Securities and Exchange Commission, ending a century-old tradition that kept these financial watchdogs \u201cindependent\u201d from White House control. As former financial regulators, we are […]<\/p>\n","protected":false},"author":1,"featured_media":290795,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[122101,101215,111256,122102],"tags":[7732,4629,11005,2218,76733,15894],"dealstore":[],"offerexpiration":[],"class_list":["post-290794","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-arguments","category-donald-trump","category-governance","category-regulation","tag-democracy","tag-dont","tag-independence","tag-journal","tag-mourn","tag-regulatory"],"yoast_head":"\nDon\u2019t Mourn Regulatory Independence : Democracy Journal - Som2ny Network<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/fivemor.com\/?p=290794\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Don\u2019t Mourn Regulatory Independence : Democracy Journal - Som2ny Network\" \/>\n<meta property=\"og:description\" content=\"Amid the recent flurry of radical executive orders, one in particular has flown under the radar: President Trump has seized control over regulators like the Federal Deposit Insurance Corporation and the Securities and Exchange Commission, ending a century-old tradition that kept these financial watchdogs \u201cindependent\u201d from White House control. 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