Patterico's Pontifications

9/20/2008

L.A. Times: The President Can’t Fire the SEC Chairman; Federal Court Decision: Yes He Can!

Filed under: 2008 Election,General,Law — Patterico @ 4:30 pm

An L.A. Times article — the same one I criticized earlier today, asserts that the President can’t fire an SEC Chairman:

On Thursday, [McCain] said he’d fire the chairman of the Securities and Exchange Commission, Christopher Cox [if McCain were President]. (A president appoints but can’t fire an SEC chief, though he can apply pressure to resign. The White House said President Bush had confidence in Cox.)

Oh really?

Via Jonathan V. Last at the Weekly Standard comes a link to a federal court decision that certainly seems to say otherwise. The case is Free Enterprise Fund v. Public Company Accounting Oversight Board, 537 F.3d 667, 668-69 (D.C. Cir. 2008), and here is the relevant quote:

“Members of the [Securities and Exchange] Commission, in turn, are appointed by the President with the advice and consent of the Senate and subject to removal by the President for cause; its chairman is selected by and serves at the pleasure of the President.”

Last’s correspondent adds:

The courts have never said that Congress can completely prevent a president from firing officials of an independent agency. At best, Congress can limit the president to firing such officials only “for cause,” and the term “for cause” is generally interpreted pretty broadly.

This one may be worth an e-mail to the Readers’ Rep.

What do these reporters do — just listen to what the Obama campaign claims, and take it at face value?

Don’t answer that.

UPDATE: Jake Tapper says the President can’t fire the SEC Commissioner. Jake Tapper, I love ya, man. But as between you and the Circuit Court of Appeals for the District of Columbia, I’m going with the judges on this one.

UPDATE x2: I e-mailed Tapper about this, and he says he’ll look into it. Meanwhile, you may read a more fleshed-out argument that the President may fire the SEC Chair, here.

12 Responses to “L.A. Times: The President Can’t Fire the SEC Chairman; Federal Court Decision: Yes He Can!”

  1. Bush can certainly take the gavel out of Cox’s hand, without cause. Bush made him Chairman without Congress’ say-so, and he can unmake him just as easily. He needs to make up a reason to fire him as a Commissioner though, since that appointment did have Congressional approval.

    Kevin Murphy (0b2493)

  2. Right. Cox would not be chair without McCain’s OK. I’m not sure he was at fault but Bush should have fired Tenet after 9/11 and, when the house burns down on your watch, you should be out looking for a job, just on principle.

    The same applies to the short selling ban. I don’t know that that is a good idea but there was some concern about who was selling short and about naked shorts that were not being stopped. They can always reverse that decision. Soros made his money, remember, shorting the pound. The result was a near disaster but it made Soros rich enough to do a lot of mischief.

    Mike K (b74f82)

  3. Unless Bush can fire Doyle McManus, your letter to the reader’s rep will not result in a retraction visible by anything other than a scanning electron microscope.

    Tapper, OTOH, might listen, although methinks somebody’s leaving him nasty memos at ABC lately.

    Apogee (366e8b)

  4. This is the kind of ridiculous stupidity that goes for debate in the highest public office today.

    SPQR (26be8b)

  5. Just an aside, when, in the armed services, a commander is relieved “for cause”, the cause most commonly cited is a “loss of confidence” in the commander by his superiors.

    XBradTC (9a66bc)

  6. Comment by XBradTC — 9/20/2008 @ 6:07 pm

    Nothing causes a loss of confidence like running a $2B+ nuclear carrier onto a sand-bar,
    whether or not it’s on the charts.

    Another Drew (0d32b9)

  7. Thanks for linking to that case. I know it’s off-topic, but it deserves to be said: The Kavanaugh opinion is a masterpiece. Watch him, and watch him good. This country needs him to get a promotion ASAP.

    Alan (c61d4e)

  8. It’s actually somewhat ambiguous. It’s clear that Cox can be removed as Chairman at will. Whether or not he can be removed as a Commissioner, and if so, the grounds for firing is something the D.C. Circuit has assumed, but not decided squarely. The case that dealt with this issue explicitly was S.E.C. v. BLINDER, ROBINSON & CO., INC., 855 F.2d 677, 681 (10th Cir. 1988), where the 10th Circuit wrote:

    “Until 1950, the Chairman was elected
    annually. Following Reorganization Plan No. 10 of 1950 (see, Reorganization Act of 1949, 5 U.S.C. § 901-913), the President designates the chairman. Pursuant to this Reorganization Plan, the chairman succeeded to most of the executive and
    administrative functions of the commission. The Act does not expressly give to the President the power to remove a commissioner. However, for the purposes of this case, we accept appellants’ assertions in their brief, that it is commonly
    understood that the President may remove a commissioner only for “inefficiency, neglect of duty or malfeasance in office.””

    The D.C. Circuit cites to Blinder, Robinson in Free Enterprise Fund with approval, but this is a pure dictum, so the issue could be fairly challenged.

    That being said,the language of Free Enterprise fund, and the general reluctance of the courts to completely insulate adminstrative agencies from executive control in cases of bribery, misconduct, etc., make it extremely likely that the Free Enterprise fund dicta would be found to be the law by the D.C. Circuit.

    However, nothing Cox has done that we know of rises to the level of “for cause”, so he could not be fired as a Commissioner for this mess.

    Cyrus Sanai (4df861)

  9. “Inefficiency” means whatever the president says it means, so yes, if McCain were president he could remove Cox from the commission altogether, not just fire him as chairman. Not that Cox deserves it; McCain is wrong to blame him, but that’s a judgment call, not something McCain can be proven wrong about.

    But watch the spin once (if) this comes to the public attention. It’ll be “well yes, McCain was right after all, but only by accident; he couldn’t possibly have known this, since we in the media didn’t know it, and he’s only a stoopid Republican who must by definition know even less than we do”. Just as Palin couldn’t possibly have known that Freddie Mac and Fannie Mae were costing the taxpayers too much, or that “Bush Doctrine” is an undefined term.

    Milhouse (89df7f)

  10. Unforetunately, McCain’s statement was populist pandering of the worst order. Cox has no more role in the crisis in financial markets than anyone else.

    Here’s an interesting analysis by David Blake in the Financial Times on Greenspan’s role:
    http://www.ft.com/cms/s/0/32b85c72-859b-11dd-a1ac-0000779fd18c.html

    Alta Bob (e70400)

  11. Except, AB…
    Greenspan has no current position, all we can do is denounce his stupid policies (particularly effective in the presence of a certain NBC journalist);
    Cox does have a relevant position and he gets to take the fall. I would think there also might be some caterwauling on Capitol Hill re the chairmanships of Mr Dodd, and Mr Frank – now there are a pair of Bozo’s intimately linked to this problem both directly and indirectly.

    Another Drew (551fef)

  12. I don’t love Tapper. His standards for checking on things he reports are ridiculously low — so low that I wouldn’t link him were he a regular blogger, and ridiculously low for someone who’s supposed to be a “professional journalist.”

    Beldar (7dd37a)


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