Trump Signs Executive Order Reshaping Power Over Independent Agencies

WASHINGTON — President Donald Trump signed an executive order on February 18, 2025, aiming to significantly increase White House control over independent agencies, a move that could drastically reshape bank regulation.

This order reflects the Trump administration’s ongoing effort to consolidate power under the unitary executive theory, which suggests that the president holds ultimate authority over the executive branch. An influential figure in this initiative is Russell Vought, Trump’s budget chief and a key architect of Project 2025.

Under the new order, the Office of Management and Budget (OMB), led by Vought, will evaluate major proposals from independent agencies. OMB is tasked with developing performance standards for these agencies, revising budgets, and mandating that agencies appoint a liaison to the White House.

The executive order states that any budgetary adjustments made by OMB could limit independent regulatory agencies from using funds for specific activities or projects. Additionally, it prohibits agency employees from interpreting the law in ways that contradict the positions of the President or the Attorney General.

The White House asserted that maintaining accountability within the federal government requires that those with executive power be overseen by elected officials. “For the Federal Government to be truly accountable to the American people, officials who wield vast executive power must be supervised and controlled by the people’s elected President,” the statement read.

The Federal Reserve (Fed) will maintain its independence regarding monetary policy, but the order does extend to its supervision and regulation of financial institutions. This aspect corresponds with Treasury Secretary Scott Bessent’s comments during his Senate Banking Committee confirmation where he emphasized the Fed’s independence in monetary policy.

Legal experts predict that the order will face substantial challenges in courts. Robert Weissman, co-president of Public Citizen, criticized the move, stating, “Trump’s illegal executive order on independent agencies aims to shield corporations from accountability and centralize more power with Trump and his minions.”

While the order specifically mentions the Fed, several independent regulatory agencies, including the Federal Deposit Insurance Corp., the Fed, and the Consumer Financial Protection Bureau, are likely to be affected.

“Should this executive order survive legal scrutiny by the courts, it would change the rulemaking and interpretive legal process dramatically,” said Carrie Hunt, chief advocacy officer at America’s Credit Unions. “This would be a totally new era linking agency action to the sitting president.”

A fact sheet accompanying the order highlights potential impacts on the Securities and Exchange Commission, the Federal Trade Commission, and the Federal Communications Commission.

The banking sector expresses concern over its regulatory framework becoming more politicized. According to a recent survey by IntraFi, 46% of respondents in the banking industry believe that the Fed’s independence would weaken under a second Trump term.

This executive order follows a series of Trump administration actions aimed at dismantling functions within specific agencies, such as the CFPB, and efforts to lessen the power of civil service employees.