When the Supreme Court voted narrowly to preserve the independence of the Federal Reserve at the end of June, many investors breathed a sigh of relief. It may have been premature. Because on the same day, in another decision, the court killed the independence of every federal agency — including the Securities and Exchange Commission.
The consequences of that decision for capital markets are not as immediate, but they are equally profound and have been curiously overlooked. From now on, whoever is president can fire any SEC commissioner at any time, for any reason or none at all. He can reduce the commission to a single member, the chair. The SEC’s traditionally independent enforcement power is now effectively under presidential control.