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Ok, @jerrybrito posed a very interesting question on Twitter today. "Am I crazy, or does the Securities and Exchange Act not create the position of SEC Chairman?" Come with me on a pictorial journey of weird independent agencies and unconstitutional powers.... 1/1000s https://twitter.com/jerrybrito/status/1276178783280738305
First off. Jerry is right. 15 U.S.C. 78d establishes the Commission and says it will have five Commissioners. Some other sections reference a Chairman but the establishment clause never discusses a chairman or how he/she should be picked or by whom. Amazing, no?
My first instinct was to look at the history. Interestingly, according to the SEC Historical Society (yes it exists) Joe Kennedy Sr. (John F's dad and the first Chairman of the SEC) was appointed by FDR and FDR "insisted" that the other Commissioners pick him as chair.
Incidentally here they are in all their new deal glory! Strong.
Ok, so that makes it seem like *originally* the Commissioners picked a Chairman from amongst themselves and it suggests that the Commission effectively made up the position according to its own rules because again there's no actual creation of a Chairman position in the statute.
That's weird but fine (I guess). But wait, you say, that's not at all how it works today, right? The president picks the chairman, right? Yes. So the question is how and when did this practice change!?
Well, maybe we can look at the current SEC rules in the CFR to find out. Sure enough! Behold
Now what in the wide wide world of sports is the Reorganization Plan No.10 of 1950!? According to current CFR that's the authority for switching Chairman selection from Commissioner vote to Presidential Fiat. That seems like something important. Is it even a law from Congress???
Well. Its a message from the President to Congress made pursuant to the Reorganization Act of 1949. Here's the relevant part (it ended up in the Federal Registry so its totes law ya know).
You see, the Reorganization Act of 1949 is a crazy broad statute that empowered the President to, you guessed it, reorganize executive agencies as he saw fit. So Truman (he's president now in the story, keep up) decided he wanted power to appoint chair & took it using this act.
But there's something fishy about the Reorganization Act of 1949. How could the president have free reign to simply rearrange so-called independent agencies without any input from Congress!? Well there was actually some oversight.... reorg plans only take effect if:
So that's why Truman had to send a message to the two houses of Congress in order to claim the power to appoint Chairman. That starts a clock for Congress to either remain silent (reorg approved) or veto it. And in that letter Truman even grumbles about how the law requires this:
Now if you are a Constitutional Law nerd like me, your ears have perked up at the notion of a unicameral legislative veto of executive authority. Why? Because it is what we might call.... unconstitutional. See INS v Chadha
Basically the court said that a single house of Congress can't decide, on its own, to overrule the actions of the president with the force of law because a single house can't make law (bicameralism) and laws need to be signed by the president, (presentiment)! Silly.
Now... Chadha was in 1983, years after the Reorganization Act, but it pretty clearly suggests that the very act that empowered President Truman to take the power to appoint the SEC Chairman is invalid. So...
QED the President's authority to choose which SEC Commissioner will be Chair is unconstitutional. The Commissioners retain power to choose amongst themselves. All Chairmen since 1950 have been selected by an unconstitutional process. (Please note that I'm not *really* serious).
Ok, and here's probably why this is not true. Chadha isn't retroactive (always? sometimes? I'm not sure, and on what grounds!?). More for another day. https://books.google.com/books?id=vOYFAAAAIAAJ&pg=PA1100&lpg=PA1100&dq=chadha+retroactive&source=bl&ots=3iDJETqyFm&sig=ACfU3U3ctueDmPB6O1Vawj_eacpjN35q0Q&hl=en&sa=X&ved=2ahUKEwiD9N6E-J3qAhXJct8KHcR9DukQ6AEwCXoECAQQAQ#v=onepage&q=chadha%20retroactive&f=false
How can something be unconstitutional but if it was done before the Court figured out it was unconstitutional and if it's not the example that made the Court discover it is unconstitutional it's somehow fine now and constitutional. Honestly, this is terrible.
