'Independent' Government Agencies - Are They Legal?

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• Bill introduced to End the Fed.
  

EXCLUSIVE: GOP Lawmakers Unveil Bill To ‘End The Fed’ | (dailycallernewsfoundation.org)

The U.S. Federal Reserve, often referred to simply as "the Fed," is the central banking system of the United States. It has a unique structure that blends public and private elements, designed to insulate it from direct political influence while still serving a public purpose. Below is an overview of its organizational structure and its relationship to the executive branch.
Organizational Structure of the Federal Reserve

Board of Governors
The Fed is overseen by a Board of Governors, a federal agency based in Washington, D.C.
It consists of seven members, appointed by the President of the United States and confirmed by the Senate.
Each governor serves a 14-year term, staggered so that one term expires every two years, which helps ensure continuity and independence from short-term political pressures.
The Chair and Vice Chair are selected from among the governors by the President and confirmed by the Senate for four-year terms (though they can be reappointed). The current Chair, as of March 2025, is Jerome Powell, whose term as Chair runs until May 2026 unless changed.
The Board sets monetary policy, supervises and regulates banks, and oversees the broader Federal Reserve System.

Federal Open Market Committee (FOMC)
The FOMC is the primary body responsible for conducting monetary policy, such as setting interest rates and managing the money supply.
It consists of 12 voting members:
All seven members of the Board of Governors.
The President of the Federal Reserve Bank of New York (a permanent voting member).
Four of the remaining 11 Reserve Bank presidents, who rotate on a one-year basis.
The FOMC meets regularly (typically eight times a year) to assess economic conditions and adjust policy as needed.

12 Regional Federal Reserve Banks
The Fed operates through 12 regional banks, located in cities like New York, Chicago, San Francisco, etc., each serving a specific geographic district.
These banks are technically private corporations owned by member commercial banks in their districts, which hold stock in them (though this ownership doesn’t confer typical control rights).
Each bank has a nine-member board of directors:
Six are elected by member banks (three representing banks, three representing the public).
Three are appointed by the Board of Governors.
The regional banks carry out day-to-day operations, such as distributing currency, processing payments, and supervising local banks. They also provide economic research and input into monetary policy.

Member Banks
All national banks (chartered by the federal government) are required to be members of the Federal Reserve System, while state-chartered banks can opt in.
Member banks contribute capital to their regional Federal Reserve Bank and receive a fixed 6% dividend on their stock, but they don’t control the Fed’s policies.

Advisory Councils
The Fed has several advisory bodies, like the Federal Advisory Council, which consists of representatives from the banking industry and provides input to the Board of Governors.

Relationship to the Executive Branch
The Federal Reserve is designed to be independent within the government, meaning it operates with significant autonomy from the executive branch, though it is not entirely disconnected. Here’s how the relationship works:

Appointment Power
The President appoints the members of the Board of Governors, including the Chair and Vice Chair, subject to Senate confirmation. This gives the executive branch some influence over the Fed’s leadership, but the long terms (14 years for governors, renewable 4-year terms for the Chair) limit short-term political control.

Congressional Oversight
While the Fed is not directly controlled by the executive branch, it is accountable to Congress, which created it under the Federal Reserve Act of 1913.
The Fed must report to Congress semi-annually on its monetary policy actions, and the Chair often testifies before congressional committees. However, Congress does not dictate specific monetary policy decisions.

Independence in Monetary Policy
The Fed has broad authority to set monetary policy (e.g., interest rates, money supply) without approval from the President or Congress. This independence is intended to prevent political interference in economic decisions that require long-term stability rather than short-term populist pressures.
The executive branch cannot directly order the Fed to change interest rates or other policies, though Presidents have historically tried to influence it through public statements or private pressure (e.g., President Trump’s frequent criticism of Jerome Powell).

Funding Autonomy
The Fed is self-funded, primarily through interest earned on government securities it holds and fees from banking services. It does not rely on congressional appropriations, which further shields it from executive or legislative control.

Coordination, Not Subordination
The Fed often coordinates with the Department of the Treasury (part of the executive branch) during financial crises, as seen during the 2008 financial crisis or the COVID-19 pandemic. For example, the Treasury may implement fiscal policy (spending, taxation), while the Fed adjusts monetary policy. However, this is a partnership, not a hierarchical relationship.

Summary
The Federal Reserve’s structure combines a centralized Board of Governors with decentralized regional banks, balancing public accountability with private-sector input. Its relationship to the executive branch is limited: the President appoints its leaders, but once in place, the Fed operates independently to fulfill its dual mandate of price stability and maximum employment. This independence is a cornerstone of its design, though it remains subject to broader governmental oversight through Congress.

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I'm putting the NGO issue aside as it seems that in the US anyway, any government funding to NGO's flows through these 'independent' agencies.

While it seems that there is no contention that these 'independent' agencies fall within the Executive branch structure (officially), the notion of 'independence' is a fictional creation justified by certain organizational structures. This IMO creates a defacto (unconstitutional) 4th branch of government which is a significant component of the deep state!

I think it would fair to stop using the political label of 'independent' and replace it with "Extraconstitutional"!

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Reposting this as I've gone back to make the wall of text readable and highlighted relevant bits...

Posting this from a Grok query... I may analyze further later.

the U.S. federal government, no independent agencies claim complete independence from the executive branch in a strict legal or constitutional sense, as they are all technically part of it. However, certain agencies are designed with structural features—such as limited presidential removal power, bipartisan leadership, or independent funding—that grant them significant autonomy, leading some to assert a practical or functional independence. The concept of "complete independence" is more rhetorical or aspirational than absolute, given their placement within the executive branch under Article II of the Constitution. Here’s a look at key examples as of March 5, 2025, based on their design and behavior.

Agencies with Notable Claims to Autonomy

Federal Reserve System (The Fed)

Why It Claims Independence: The Fed, as the central bank, emphasizes its autonomy to conduct monetary policy—setting interest rates and managing money supply—free from short-term political pressures. Its leaders, including the Board of Governors, argue this insulation is critical to economic stability, a stance rooted in its creation under the Federal Reserve Act of 1913.

Structural Features: Governors serve 14-year staggered terms, far exceeding presidential terms, and can only be removed for cause (though this isn’t explicitly statutory). The Fed funds itself through interest on government securities, not congressional appropriations, reducing executive leverage. While the President appoints its chair and governors (with Senate confirmation), it doesn’t report directly to the White House.

Limits: It’s still within the executive branch, and its enabling statute could be amended by Congress. Recent debates, like those in February 2025 over executive oversight, show its independence isn’t absolute.

Consumer Financial Protection Bureau (CFPB)

Why It Claims Independence: Established under the Dodd-Frank Act of 2010, the CFPB was designed to regulate consumer financial products with minimal political interference. Its first director, Richard Cordray, and subsequent leaders have touted its independence as essential to protecting consumers from Wall Street influence.

Structural Features: Initially led by a single director with a five-year term, removable only for cause (inefficiency, neglect, or malfeasance), it’s funded by the Federal Reserve, not Congress. The Supreme Court’s 2020 Seila Law v. CFPB ruling struck down the for-cause removal protection, making the director removable at the President’s will, but the agency still operates with budgetary autonomy.

Limits: Post-Seila Law, its claim to independence weakened, aligning it closer to executive control, though its funding structure preserves some distance.

Securities and Exchange Commission (SEC)

Why It Claims Independence: The SEC, created in 1934, oversees securities markets and positions itself as a neutral regulator, insulated from political whims to ensure investor confidence. Its commissioners often emphasize this in public statements.

Structural Features: A five-member bipartisan commission, with staggered five-year terms and no more than three from one party, limits presidential packing. Commissioners can only be removed for cause (per Humphrey’s Executor v. United States, 1935), though this isn’t explicitly in its statute—it’s inferred from precedent.

Limits: Subject to congressional oversight and presidential appointments, it’s not fully detached. Trump’s February 2025 executive order pushing for White House review of regulations challenges this autonomy.

Federal Communications Commission (FCC)

Why It Claims Independence: The FCC regulates communications (radio, TV, internet) and asserts independence to maintain impartiality in licensing and rulemaking, a stance tracing back to the Communications Act of 1934.

Structural Features: Like the SEC, it’s a five-member bipartisan commission with staggered terms and for-cause removal protection, distancing it from direct executive fiat.

Limits: Recent executive actions, like the February 18, 2025, “Ensuring Accountability for All Agencies” order, requiring regulatory submissions to the Office of Information and Regulatory Affairs (OIRA), erode this independence.

Federal Election Commission (FEC)

Why It Claims Independence: The FEC oversees campaign finance and claims autonomy to ensure fair elections without partisan bias, a principle baked into its post-Watergate creation in 1974.
Structural Features: A six-member bipartisan commission (no more than three from one party) with staggered six-year terms and for-cause removal protection reinforces its nonpartisan image.

Limits: Deadlocks due to its even-numbered structure often paralyze it, and it’s still subject to executive appointments and congressional funding.

Context and Caveats

Legal Status: The Supreme Court has upheld some independence (Humphrey’s Executor) for multimember bodies with quasi-legislative or quasi-judicial roles, but recent rulings (Seila Law, Collins v. Yellen, 2021) narrow this, asserting presidential control over single-director agencies. No agency is wholly free of executive influence—appointment power and statutory origins tie them to the broader branch.

Practical Independence: Agencies like the Fed and SEC claim operational autonomy, often loudly, but this is contingent on tradition, funding, and judicial precedent, not constitutional immunity. The Fed’s self-funding and the SEC’s market role amplify their perceived separation.

Current Trends: The February 2025 executive order under Trump, mandating OIRA review of “significant regulatory actions” from independent agencies, signals a push to reel them in. This doesn’t eliminate their independence but tests its limits, especially for agencies like the Fed (partially exempt) versus the FCC or SEC.

Note: This part was added due to some previous queries, and I'm leaving it in as it does give a speculated opinion of a Constitutional Lawyer, and aligns with my laymen's opinion.

Robert Barnes’ Angle
If we tie this to Robert Edward Barnes’ perspective—given your earlier questions—he’d likely scoff at claims of “complete independence.” He’d argue these agencies, even the Fed or SEC, are still tethered to executive and elite interests, serving as tools of the establishment rather than true checks. He might point to their appointment processes or the 2025 order as proof they’re not as independent as they claim, aligning with his populist critique of bureaucratic overreach.

Conclusion
No agency claims complete independence in a formal sense—legal scholars and the Constitution wouldn’t allow it—but the Federal Reserve, CFPB, SEC, FCC, and FEC assert significant autonomy through structure and mission. Their “independence” is real but partial, vulnerable to executive, legislative, or judicial shifts.

[ELIAKIM]

I'm putting the NGO issue aside as it seems that in the US anyway, any government funding to NGO's flows through these 'independent' agencies.

While it seems that there is no contention that these 'independent' agencies fall within the Executive branch structure (officially), the notion of 'independence' is a fictional creation justified by certain organizational structures. This IMO creates a defacto (unconstitutional) 4th branch of government which is a significant component of the deep state!

I think it would fair to stop using the political label of 'independent' and replace it with "Extraconstitutional"!

DataRepublican is taking a deep dive into the NGO's.

[=42]

I'm putting the NGO issue aside as it seems that in the US anyway, any government funding to NGO's flows through these 'independent' agencies.

While it seems that there is no contention that these 'independent' agencies fall within the Executive branch structure (officially), the notion of 'independence' is a fictional creation justified by certain organizational structures. This IMO creates a defacto (unconstitutional) 4th branch of government which is a significant component of the deep state!

I think it would fair to stop using the political label of 'independent' and replace it with "Extraconstitutional"!

DataRepublican is taking a deep dive into the NGO's.

DataRepublicans project(s) is mapping the cash flow & connections of individuals in government (including extended circle of friends & family) & orgs to the multitude of NGOs, contracts and other end sources of government funding.

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Twit Link

https://x.com/KilgoreTrout963/status/1898400802798207113