WASHINGTON — The Trump administration on Thursday published a memorandum that would require federal bank regulators and other independent agencies to submit more of their pending rule changes to the White House before they can be finalized, a novel procedural hurdle that could slow down guidance from the agencies.
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Those requirements have not been fully applied to independent agencies. Regulators such as the Federal Reserve typically do submit formal rulemakings to the White House for review, but the new directive would expand the scope to less formal policy moves such as guidance.
The memo argues that because independent agencies such as the Fed, Securities and Exchange Commission, Commodity Futures Trading Commission and others derive their authority from the executive branch they are equally subject to Congressional Review Act procedures.
“This Memorandum reinforces the obligations of Federal agencies under the CRA in order to ensure more consistent compliance with its requirements across the Executive Branch,” Vought wrote. “It also sets forth guidelines for analysis that [OIRA] will use to properly classify regulatory actions for purposes of the CRA.”
Under the Congressional Review Act, both formal regulations promulgated under the Administrative Procedure Act and more informal guidance must be sent to OIRA for evaluation as to whether the proposals are “major” or “minor.” Major rules must be sent to Congress for review, and lawmakers have the opportunity to nullify a policy by passing a resolution that is signed by the president.
A policy is considered “major” if it has an impact on the economy amounting to more than $100 million, results in a major increase in consumer costs or has “significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreign-based enterprises in domestic and export markets.”
Existence of the memo was first reported by The Washington Post.
The Federal Reserve’s monetary policy authorities would be explicitly exempt from the memo, as required by the Federal Reserve Act.
Some regulators that operate independently already submit rules for review by OMB, including the Office of the Comptroller of the Currency, which is technically a bureau of the Treasury Department. But that procedural step is typically just a formality.
Yet some critics say the White House was overstepping its own authority by attempting to subject independent agencies to a new layer of oversight.
Amit Narang, a regulatory policy analyst at Public Citizen's Congress Watch, speculated that the memo was spearheaded by acting White House Chief of Staff Mick Mulvaney, a longtime critic of the post-crisis regulatory regime. Narang said the move appeared to be an attempt to bring those agencies under White House control.
“This is a straight power grab by the White House over independent agencies created by Congress,” Narang said. “This is Mick Mulvaney trying to use the CRA as an excuse to give the White House more control over independent agencies.”
The memorandum said that it would apply to all “historically independent agencies,” which includes the Fed, SEC, CFTC, Federal Trade Commission, Federal Election Commission and National Labor Relations Board, among others. Narang said the White House’s intervention into such a wide range of groups whose independence has been widely accepted is a mistake.
“It's not a good idea to put the Federal Election Commission under Trump's thumb,” Narang said.
