Last week, the Democratic Party released its official platform, which included a very important plank regarding the appointment of federal regulators. In the section titled “Fixing our Financial System,” the party explicitly states: “We believe that personnel is policy.” It goes even further, though, by promising not to appoint anyone who is “beholden to the industries they regulate” and demanding that regulators have “a track record of standing up to power and safeguarding the public trust.”
This strong language is an encouraging sign for progressives in the Democratic Party who stress the importance of appointing fair regulators. One of the most avid defenders of fair, impartial regulation has been Senator Elizabeth Warren. Warren, who has consistently opposed nominees with excessive ties to industry while applauding effective reformists. The DNC platform has now made Sen. Warren’s mantra of “personnel is policy” into a fundamental doctrine for the Democratic Party.
“Personnel is policy” refers to the belief that the people put in charge of the regulatory state have a significant influence on the economy and society. In our recent report Untamed: How to Check Corporate, Financial, and Monopoly Power, the Roosevelt Institute highlights the significance of federal agencies in our current debates. With Congress passing little to no new legislation, the responsibility of rulemaking has fallen on our regulators. Within the last year, the Department of Labor has passed new rules on overtime pay and financial advisors’ conduct, the Department of Education’s gainful employment rule has targeted corrupt for-profit universities, and the Treasury Department has rolled out its myRA plan to expand access to retirement savings.
However, this streak of active, aggressive rulemaking and enforcement by certain agencies within the Obama administration is not always the norm. In the past, there have been widespread cultures of inaction and deregulation. As noted in Untamed, the Department of Energy wrote twice as many rules under Secretary Moniz in 2014 as it did during the entire eight years of the Bush administration. The question then arises, what causes such radical differences in regulation? One answer: personnel.
The key to a successful regulatory agency is the kind of people put in charge. An important example of an activist regulator is Gary Gensler, the Chairman of the Commodity Futures Trading Commission (CFTC) from 2009 to 2014. According to a recent Chicago Tribune piece, Gensler “became known as one of President Barack Obama’s toughest regulators, willing to buck his friends and former colleagues to tighten rules on the $400 trillion swaps market following the 2008 crisis.” Gensler’s energy, innovation, and enthusiasm flowed through the agency and resulted in a more robust effort to regulate these financial instruments, which explains why, according to the Tribune, “his name became an expletive to many on Wall Street.”
Moniz and Gensler are just two examples of the positive effects strong regulators can have on a federal agency, and by extension, an entire sector of our economy. Regardless of who wins the 2016 election, the men and women whom the president-elect chooses to head these important agencies may prove as impactful as the president’s victory itself. While progressives hope to find the likes of Moniz and Gensler in the next administration, it will be more important that the entire administration shares their view that regulators must play an active role in monitoring the economy and our society. With “personnel is policy” now inscribed in the Democratic Party’s platform, there is good reason to hope that we may see the progressive, diverse administration that our economy and our country so desperately need.