Examining the Power of Commission Chairs through the Financial Regulatory Agencies

Abstract

Though Congress originally intended for multimember, independent regulatory agencies (“commissions”) to be bodies of equals, it has inadvertently strengthened the authority of commission chairs to such an extent that a majority of members cannot enact their preferred policies if the chair does not agree. Commission chairs’ authority to direct staff was originally granted to improve agencies’ efficiencies while still permitting a majority of commissioners to govern, but has instead resulted in a weakening of associate members such that they cannot effectively “check” the chair’s actions. For example, if a commission’s majority wants to enact a policy but the chair does not direct staff to draft a regulation, the majority largely has no recourse and the policy will not be enacted.

This essay discusses how the laws controlling commission governance have affected the interactions between chairs and associate commissioners. It also examines the specific statutes and regulations governing five commissions that regulate banking and financial services to understand the particular provisions that give the financial regulatory commission chairs power, as well as those provisions that (to some extent) allow associate commissioners to check the chairs’ powers, focusing on four areas: the powers of chairs, agenda-setting authority and quorums, rights of individual associate members, and prohibitions on delegating authority. Finally, it offers several changes that, if made by Congress or the agencies themselves, could give associate members more control and supervisory authority over the agencies, returning chairs to their original role as an official who simply keeps the agency operating efficiently.