Lots of confusion here about the relevant legal issues. The Fed presents a much trickier question than other administrative agencies. Article II, Section 1 says: “The executive Power shall be vested in a President of the United States of America.” So if a government body exercises the “executive power,” it does so as a delegate of the President.
The FTC, for example, exercises classic “executive power.” It sues people for violating antitrust and consumer protection laws. It doesn’t get more “executive power” than that.
The Fed, by contrast, for the most part doesn’t exercise “executive power.” The Fed influences private conduct indirectly through open market operations as a bank. The Fed has ancillary functions in making and enforcing bank regulations, but arguably those are separable. That makes the independence of the Fed a much trickier question.
At the other extreme would be someone like the CEO of Amtrak. He can’t exercise the power of the state to prosecute you. It’s a train company that functions like any other company and happens to be government owned.
On the other hand, a major responsibility of the FTC commissioners is to develop regulations for interstate commerce, a power that is solely granted to Congress. Allowing the President to disregard the rules Congress specified when delegating that power to the FTC is usurping Congress's regulatory powers and giving them to the President. At best you could argue that the laws that created the FTC commingle congressional and executive power in an untenable manner, and it will need to be restructured. But in the meanwhile, you still have to justify why congress limiting the executive's enforcement power is worse that the executive usurping congress's regulatory power. And more-so why it is necessary to do so in an injunction, when it contradicts long-standing precedent.
No, that cuts the other way. The only reason we allow the FTC to create regulations with the force of law is by pretending that regulations are just an expression of how the executive will exercise its delegated discretion in enforcing the law. That makes rulemaking a quintessential “executive power.”
Your argument amounts to the idea that, because Congress has done one wrong thing (allow the executive branch to make laws) it should be permitted to do a second wrong thing (allow the Article I “executive power” to be exercised independently of the President). That makes no sense. You can’t reward Congress for doing an unconstitutional thing by letting them do a second unconstitutional thing.
How does the fed exist then, if not through executive power? The 10th amendment only allows the federal government to exercise powers expressly granted in the constitution.
Yes, but Article I, Section 8 says: “[The Congress shall have Power . . . ] To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.”
McCulloch v. Maryland held that was broad enough to encompass chartering a federal bank: https://www.oyez.org/cases/1789-1850/17us316. Now, you have a point that it’s hard to see what enumerated power is served by creating a national bank. But I think it fairly falls within the enumerated power of providing for “the common defense and general welfare of the United States.” Remember, the huge issue at the time was how to pay for the military and what to do with all the war debt states had taken on. The first national bank was created to deal with that. So the central bank fit into the concept of the “general welfare of the United States” in a much more specific way than is usually imagined. That is to say, it doesn’t require a strained reading of “general welfare of the United States” that would be broad enough to basically gut the concept of enumerated powers. Instead, at the time, the management of the nation’s finances was seen as an existential threat to the new government as a whole.
I think the issue there is article I, unlike article II, expressly states what the legislative branch consists of. And it states it consists of the house and the senate. Nothing else.
So the reading of a bank that excecutes the law establishing it, I don't know how it could fall under anything but article ii. From your explanation, that wouldn't violate McCulloch v. Maryland authorization of the executive to execute the law.
Oh, I see what you’re saying. Article I, II, and III, create “Congress,” the “President,” and the “Supreme Court.” Those are the constitutional organs of the government, and are invested with the legislative, executive, and judicial powers, respectively.
The constitution assumes you can create various offices and departments associated with each of these organs, without spelling it out. But nothing turns on where anything “sits.” The question is whether any entity is exercising the “executive power,” or “legislative power,” or “judicial power.” For example, one of the first things Congress did in 1789 was to create the Marshall’s Service to provide security to courts. These were actually created as a body in the judicial branch. https://en.wikipedia.org/wiki/United_States_Marshals_Service. But they don’t exercise the “judicial power.” They exercise executive power—law enforcement.
So the Fed “sits” in the executive branch. But that doesn’t necessarily mean it exercises the “executive power” within the meaning of Article I, Section 1.
Wikipedia link provided says Marshalls are part of the DoJ, which is the executive branch.
>The constitution assumes you can create various offices and departments associated with each of these organ
Definitely a valid point. But the legislative is unique in that the constitution explicitly defines what can exercise the legislative power, and it's defined as consisting of the house and senate. The executive and judiciary has no such restriction.
At bottom it's kind of a kludge, which the US has unfortunately waited until now to test in the courts.
There are a lot of reasons why letting the executive control the Fed would be massively destabilizing. None of those reasons go to the constitutionality of the matter, so courts have generally chosen to sort of handwave it - and the executive hasn't really forced the issue.
Won't be able to depend on those factors much longer...
The US has had a nationally bank since before the constitution was adopted: https://en.wikipedia.org/wiki/First_Bank_of_the_United_State.... The U.S. has had a central bank that controls inflation by performing market operations since 1811: https://en.wikipedia.org/wiki/Second_Bank_of_the_United_Stat....
The core concept of a central bank that influences the economy through its transactions with other banks has a lengthy constitutional pedigree. It predates the 20th century precedent on “independent federal agencies” by 120 years or so.
If some institution predating and then coexisting with the Constitution is enough to grant it a constitutional pedigree, there's a whole lot of other nonsense that would qualify.
More to the point, this doesn't address anything of substance from the discussion above. No one is arguing there shouldn't be a central bank, or that there's no textual/legal support for one.
The fed exists through its charter by Congress in the Federal Reserve Act of 1913. Clearly congress gets to define organs of government by law, no one seriously tries to make a 10th amendment case that Congress can't define organs of government.
The argument here is about independence. Can Congress define an organ of government (part of the executive branch as commonly understood) such that the president doesn't have the ability to directly administer it? Or is the president the head of all executive authority?
Similarly no one doubts that the intent of Congress was to do so here. And almost everyone thinks this has been a good thing, as macroeconomic policy can and has done terrible things in the hands of political actors in the past.
But the constitution is silent, thus the case.
> How does the fed exist then, if not through executive power?
First, the Fed is not entirely government, as chartered banks are shareholders.
Second, the Fed is / can be construed under 'power of the purse', which is under the jurisdiction of Congress.
Article I expressly states the legislative branch "consist of a Senate and House of Representatives." So the fed can't be part of the legislative branch.
Agencies can exist under the bailiwick of Congress, e.g.:
* https://en.wikipedia.org/wiki/Congressional_Budget_Office
Further, having a bank that is not directly controlled by Government dates back to the first Congress (Washington, Hamilton):
> The suspicion of this would most probably be a canker, that would continually corrode the vitals of the credit of the Bank, and would be most likely to prove fatal in those situations, in which the public good would require, that they should be most sound and vigorous. It would indeed be little less, than a miracle, should the credit of the Bank be at the disposal of the Government, if in a long series of time, there was not experienced a calamitous abuse of it. It is true, that it would be the real interest of the Government not to abuse it; its genuine policy to husband and cherish it with the most guarded circumspection as an inestimable treasure. But what Government ever uniformly consulted its true interest, in opposition to the temptations of momentary exigencies? What nation was ever blessed with a constant succession of upright and wise Administrators?
* https://founders.archives.gov/documents/Hamilton/01-07-02-02...
Alright, you have a point here, as rayiner also pointed out.
The legislative powers more accurately are vested in only congress and senate, and not only that are defined as consisting of the house and senate.
Therefore the CBO exists in a rather odd area, where it cannot exercise any power unless it moves into the execute branch, or it somehow uses executive power.
The phrase "power of the purse" does not appear in the constitution.
The idea that the members of the board of the federal reserve are structurally very distinct from appointed members of the NLRB or the FTC is ridiculous. It is just calvinball from the fact that the conservatives like the stability offered by the fed and don't like most of the other independent agencies that do things like empower unions and fine people committing financial fraud.
No, “emanations from penumbras” is calvinball. This is simple. Article II says: “The executive Power shall be vested in a President of the United States of America.”
As you note, the FTC enforces antitrust laws. Enforcement of the law is a quintessential exercise of executive power. What’s the Fed’s core function? It performs open market operations to influence the economy as a bank. Is that an exercise of executive power? Maybe. But it’s a very different question than whether the FTC exercises executive power.
Agencies like the NLRB, SEC, and others also preside over judicial action. Does the executive typically do that?
I also personally don't think that the founders were playing a joke on us when they wrote the 9th amendment.
> Agencies like the NLRB, SEC, and others also preside over judicial action.
Legally, they don’t! Nobody seriously argues Congress can create independent agencies that exercise Article III’s “judicial power.” The seeming “judicial actions” presided over by the NLRB, SEC, etc., are justified based on the theory that they are merely using court-like procedures to perform an executive function. It’s just a way of structuring an investigation and enforcement that resembles judicial procedures, but where the end result is something the executive would have the power to do anyway.
> I also personally don't think that the founders were playing a joke on us when they wrote the 9th amendment.
Can you help me understand this argument? Say I have a list of countries in Europe: Germany, France, Italy, Sweden, Norway. Then I say, “the enumeration in this list of certain countries shall not be construed to deny or disparage other countries being in Europe.” That paraphrases the 9th amendment, right? You couldn't rely on that provision to say “Denmarkistan” is a country in Europe, right? You’d need some outside evidence to prove that this country exists.
The problem with “emanations from penumbras” is that it uses the constitution itself to bootstrap a supposed privacy right that isn’t listed and isn’t supported by outside evidence. Maybe a right to privacy exists, maybe it doesn’t. But you can’t prove that by pointing to the 9th amendment.
But... they do. We just had a whole supreme court case about the structure of these proceedings within the SEC (SEC v Jarkesy). You can think that they shouldn't do this, but if your argument is "the fed performs some non-executive actions" then you need to contend with the fact that other agencies also perform some non-executive actions.