The Securities and Exchange Commission (SEC) has long been proud of its history as an independent agency, but in today’s poisonous partisanship that has infected Washington, it is questionable whether the SEC can truly function as an independent agency. Rather, the SEC is threatened with becoming a pawn in congressional battles for power. Agency independence is supposed to substitute expertise for political decision-making, but the idea of expertise has itself become suspect in some quarters as decision-making by unaccountable, unresponsive elites. Even worse, congressional hunger for campaign contributions has made members of the SEC’s congressional oversight committees and others in Congress more responsive to interest groups subject to SEC regulation, than to the SEC’s budgetary and operational needs.
When Congress is unable or unwilling to resolve difficult regulatory issues, it generally punts to the federal agencies and mandates rule-making and studies. In the Dodd-Frank Wall Street Reform and Consumer Protection Act1 Congress tasked the SEC with passing approximately 100 new rules and conducting approximately 20 studies that may lead to further rule-making. Further, Congress imposed stringent deadlines on the agency for such rule-making and also attempted to micro-manage the SEC’s organization.
