Losing the ‘independence’ in independent agencies

We are all familiar with the shuffling of Cabinet secretaries and other political appointees that comes with every presidential transition. This personnel shuffle has typically not occurred at the independent agencies that are tasked with quasi-judicial or quasi- legislative functions. In the past, many officials at independent regulatory agencies and boards served out the remainder of their terms regardless of administration changes. Sometimes the continuity is mandated by statute; other times it is a matter of tradition, premised on the idea that these more technocratic positions are, and should be, removed from partisan politics.

The Biden administration has broken with this traditional approach to personnel matters. Several prominent regulatory officials have been removed or forced out prior to the expiration of terms. In certain instances, members of commissions or boards have been removed, despite the job protections traditionally associated with these positions. Several dynamics are at play here. While these actions reflect the partisan acrimony of modern American politics and the polarization of both political parties, several recent Supreme Court decisions have expanded the president’s removal authority. What is clear is that moving forward, more regulatory officials will be subjected to greater ideological scrutiny. Following is a summary of some of the more notable personnel moves of the past year.

The most notable break with tradition was the firing of Peter Robb, the erstwhile general counsel of the National Labor Relations Board (NLRB), on President Joe Biden’s first day in office. The NLRB is primarily an administrative tribunal. The general counsel controls the flow of cases before the board and therefore has significant control over the agenda on labor/management relations. It is one of the most powerful positions in labor regulation. Robb received a “resign or be removed” email on inauguration day. While the firing was legal, it was unprecedented in 80+ years of the NLRB’s existence (although Democratic President Harry Truman pressured a Democratic general counsel into resigning in 1950). On April 7, the 5th Circuit Court of Appeals heard oral arguments in Exela v. NLRB, an appeal of an NLRB unfair labor practice determination. The appellant argued that the NLRB action was invalid because it was brought by the acting general counsel, who was not authorized to do so as Robb’s firing was illegal. This will be the first decision to directly address Robb’s firing. While most of the 5th Circuit judges are conservative, this fact alone may not be determinative.

Ironically, the conservative majority of the Supreme Court has enabled personnel changes that are progressive priorities. The Supreme Court’s recent decisions in Seila Law, LLC v. CFPB and Collins v. Yellen has bolstered the president’s removal powers. These decisions found that the president has unfettered authority to remove the directors of the Consumer Financial Protection Bureau (CFPB) and the Federal Housing Finance Agency (FHFA), respectively. The Biden transition was the first to occur after these decisions were handed down. These precedents permit the removal, without cause, of the solitary head of an agency (the decisions do not apply to members of a commission or board). These precedents permitted the firing of the heads of the CFPB and the FHFA. They were also used as grounds for the unprecedented removal of Social Security Administration Commissioner Andrew Saul.

Senator Elizabeth Warren (D-Massachusetts) is fond of saying that people are policy, and the outsized influence of Warren and her acolytes in personnel matters is clear. Recently, Chairman Jelena McWilliams was ousted from the Federal Deposit Insurance Corporation (FDIC) in a coup that was orchestrated by CFPB Director Rohit Chopra, a long-time ally of Warren. Securities and Exchange Commission (SEC) Chairman Gary Gensler removed the entire Public Company Audit Oversight Board (PCAOB) after Warren and Senator Bernie Sanders (D-Vermont) pressured him to fire PCAOB Chairman Bill Duhnke. It should be further noted that the previous chairman of the SEC in the Trump administration, Jay Clayton, also removed the entire PCAOB in 2018. That said, then-Chairman James Doty’s term had expired and the PCAOB was embroiled in controversy regarding documents leaked by staff to an audit firm.

The trend toward politicization of regulatory agencies did not start with the Biden administration, but the trend has clearly accelerated. The genie is out of the proverbial bottle, and it is unlikely that this trend will reverse.

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Invesco US Government Affairs

Andy Blocker

Global Head of Public Policy & Head of US Government Affairs

Andy Blocker is Global Head of Public Policy & Head of US Government Affairs at Invesco. Mr. Blocker works across Invesco’s three regions – the Americas, EMEA, and Asia Pacific – to bring global strategic leadership and alignment to Invesco’s public policy positions and engagement. He also leverages the political and policy expertise of Invesco’s public policy teams around the globe to provide timely insight to clients and portfolio managers. In his US focused role, Mr. Blocker drives Invesco’s legislative and regulatory advocacy initiatives with policymakers, engages with clients and opinion leaders on public policy developments, and seeks to maximize Invesco’s reputation and influence among key policy makers and stakeholders.

Mr. Blocker joined Invesco in 2018. Prior to joining the firm, he served as executive vice president of public policy and advocacy for the Securities Industry and Financial Markets Association (SIFMA), where he led a team of engaging lawmakers and regulators on international, federal, and state issues impacting the financial services industry. Before that, Mr. Blocker spent five years as managing director for UBS’ US Office of Public Policy, focusing on lobbying, client service, and education for individual and institutional clients. He also served as vice president of government relations for the New York Stock Exchange, as managing director of government and international affairs for American Airlines, and held a role at the White House as special assistant to the president for legislative affairs. Mr. Blocker began his career as a financial analyst for Bell Atlantic Corporation. He is a frequent guest on CNBC, CNBC Asia, Bloomberg, and Yahoo! Finance.

Mr. Blocker earned a BA degree in economics from Harvard University and an MBA in international business from Georgetown University.

Jennifer Flitton

Senior Vice President of Federal Government Affairs

Jennifer Flitton is Senior Vice President of Federal Government Affairs with the US Government Affairs team where she advocates on behalf of Invesco’s policy initiatives with policymakers and regulators, and ensures the firm is an influential part of the Washington conversation. Jen joined Invesco from the Securities Industry and Financial Markets Association, where she led lobbying initiatives on behalf of the asset management and broker dealer industries. Jen spent 16 years on Capitol Hill, last serving as the Deputy Chief of Staff and Legislative Director for Congressman Patrick McHenry, and as Congressman McHenry’s designee to the House Financial Services Committee’s Oversight and Investigations Subcommittee.

Fed Hall operates at the crossroads of American capitalism and government. Federal Hall Policy Advisors, LLC was founded in 2017 by three Washington DC veterans with extensive congressional, regulatory and advocacy experience. Since its inception, Fed Hall has continued to grow in a bipartisan and bicameral way, with a team that boasts more than a century of combined experience – making it one of the top boutique government affairs firms in the nation’s capital.

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This does not constitute a recommendation of any investment strategy or product for a particular investor. Investors should consult a ?nancial professional before making any investment decisions.

The opinions referenced above are those of the author as of 5/13/2022. These comments should not be construed as recommendations, but as an illustration of broader themes. Forward-looking statements are not guarantees of future results. They involve risks, uncertainties and assumptions; there can be no assurance that actual results will not di?er materially from expectations.

Invesco Advisers, Inc.