Thursday, March 5, 2020

Tan on the Fed's Independence

Caroline W. Tan, a JD student at the NYU Law School, has posted What the Federal Reserve Board Tells Us About Agency Independence, which is forthcoming in the New York University Law Review 95 (April 2020): 101-135.  NYU Law’s Samuel Issacharoff supervised her writing of the note, which originated in an undergraduate thesis at Yale supervised by Naomi Lamoreaux.
FDR Dedicates New FRB Building, 1937 (LC)
In administrative law, the sine qua non of agency independence lies in the enabling statute. If the statute protects the agency’s head from removal except “for cause,” then the agency is considered insulated from Presidential control and classified as independent. On the other hand, if the statute is silent on for-cause tenure protection, then the agency is classified as executive. This Note questions that central assumption by relying on the history of the Federal Reserve Board of Governors, arguably one of the most independent agencies in Washington. By tracing the Board’s history from a limited institution in 1913 to the powerful central bank of today, this Note demonstrates that in at least some cases, the driving factors behind operative independence have more to do with the practical realities of governance than the formalities of administrative law. Indeed, even though the Fed’s enabling statute is silent on the issue of for-cause tenure protection, the President has never fired the head of the agency. Even President Trump has declined to go so far. This Note addresses this paradox through a detailed look at the Board’s history and the major inflection points in its rise. Throughout, this Note also highlights the active role that the Board played in its own ascendency, demonstrating the dynamic life of administrative agencies and the powerful role they can play in shaping their own futures.
 Here's the TOC:
I.   The Inevitable Conflict between the President and the Board
II.   The Board’s Evolution
A.    Independence Through Internal Reorganization: The Banking Act of 1935
B.    Independence Through Symbolism: The Fed-Treasury Accord of 1951
C.    Independence Through Power: The Bank Holding Company Act of 1956
III.   Implications for Administrative Law
--Dan Ernst