Saturday, February 7, 2026

The Federal Reserve is an Executive Agency

On the logic of the unitary executive, and Supreme Court.

As our system of Federal institutions melts down, one actor deserves particular blame and disgrace. That is the Supreme Court. The extreme right majority have time and again tossed consistency, precedent, and logic to the winds in order to legislate their extreme view of executive power, which unfortuitously coincides with that of the current president. They have funneled dark money into the political system, equated money with speach, refused to address the glaring problems of gerrymandering, granted the president blanket immunity, and allowed the president to eviscerate civil service protections and independent agency structures specifically constructed by the legislature. And they have often used the shadow docket to do this dirty work, not even deigning to offer explanations at all, pursuasive or not.

Now they are tying themselves into pretzels to carve out an exception for the Federal Reserve, another independent agency that the president wants under his thumb. But it isn't so easy. The Federal Reserve clearly carries out executive functions, regulating banks, and setting interest rates, mostly by cooperating with the Treasury Department in the management of government debt. Is the Fed a court? Obviously not, as their criteria for action are economic conditions, guided by a mere two parameters- the dual mandate. They flexibly respond to conditions on the ground, in order to manage the US economy and currency. That sounds like an executive function to me. Is the Fed a legislature? They do not seem to enact laws, other than under their regulatory guise. But there are countless other agencies that promulgate rules. If that were the mark of a legislative institution, the court would have had to have made a wrong turn somewhere.

No, the Fed is just as executive as any other agency, and the court can not, by special pleading, argue otherwise. Therefore, either the Fed comes under the president's malign influence, or all the other agencies that Congress in its wisdom provided with measures of independence should have those structures respected as well. 

The significance of what the court is doing here is enormous. First, in their haste to give the president anything he wants and to execute a desire, apparently burning in the breast of John Roberts since the Nixon administration, to construct an imperial presidency, the court has repeatedly authorized the counter-legislative actions of the president to eviscerate agencies such as the labor relations board, the consumer financial protection agency, FTC, AID, and many others. This constitutes the reversal of Humphrey’s Executor v. United States, which laid the groundwork of regulatory agency structures. Second, the court is now casting about for rationales to not do the same to the Federal Reserve, out of an understandable practical desire to not have the country and its economy completely melt down. 

Both threads of action lack basis, and essentially constitute exactly what the court has heretofore so bitterly complained about- legislating from the bench. But of course, when Republicans do it, it is OK. The obvious solution is for the Supreme Court to climb down from its unitary executive horse, reverse its own shadow decisions, and accept that regulatory agencies can be structured by Congress with measures of independence to preserve the public interest precisely, as now, in the face of hostile and intemperate executives. 


Across the constitutional landscape, the problem is not that the executive is too weak, it is that Congress has ceded too much of its power to the executive. Just last week, when faced with Democratic demands that homeland security be brought to heel as a civilized agency, Republican Senators floated the idea of beseeching the President for a new executive order or two. It is incredible. Through the New Deal, World War 2, and the Cold War, the executive branch grew enormously, almost beyond the capacity of Congress to conceive of, let alone oversee. Yet in the Constitution, article 1 is by far the longest, most detailed, and most extensive. Congress has the ability "To regulate Commerce with foreign Nations", "To establish an uniform Rule of Naturalization", "To provide for organizing, arming, and disciplining, the Militia, and for governing such Part of them as may be employed in the Service of the United States", etc etc and on and on. Congress makes the rules and provides the structures within which the executive works. Indeed, "To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution." It sure seems that Congress is able, as envisioned throughout article 1, to structure executive agencies as it sees fit. 

The constitutional section on the executive branch is, in comparison, exceedingly brief, only requiring reports to congress, command of the armed forces, and the making of treaties, with the consent of Congress. He or she also gets the veto power and makes a variety of appointments, to the courts and the executive branch. That is pretty much it. All else is left to interpretation and conjecture. While the President has wide appointment powers, it is not given the he or she has equally wide dismissal powers. That would be something well within the lawmaking capacity of Congress to regulate. It is apparent from this text that Congress makes all the rules and oversees the operation of the government as a whole, in the broadest terms. The need for an executive is a practical matter, for someone who is present all the time (does not adjourn for long periods), and who, by his or her nature as a single person rather than a committee, has a centralized authority for relatively rapid, executive action, in those areas that require it. Just because the Presidency is patterned on the relations between Britain's parliament and its king (at that time) does not mean that the President has infinite latitude. Far from. It is also notable that Congress has the power to impeach officers of each of the other branches, a power none of them have over Congress. It is only the people, and Congress itself, which can remove or discipline members.

It is thus apparent from this structure and from the history from the earliest times that Congress can make institutional structures of many kinds, in its quest to do whatever is necessary and proper. Not every executive function needs the immediate attention of the President, or benefits from his or her political meddling. Sometimes the structures necessary and proper for carrying laws into execution make use of experts, or bipartisan appointees, or public-private partnerships, or tenured appointees. Right now, the Justice Department stands out as an area that particularly needs better statutory protection from the whims of the executive. The Consitution itself provides for modes of shared appointment, as when Senate approval is needed for high executive officials, or long tenure, such as for Supreme Court justices. Such methods of reigning in the dangerous and highly political powers of the presidency are clearly consistent with the text, history, and spirit of the Constitution. If those methods are not working, or one does not like them, change the laws, do not unlegislate them from the bench.


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