At a rally in Cedar Rapids, Iowa, this afternoon, Sen. John McCain, R-Ariz., attacked Chris Cox, the chairman of the Securities and Exchange Commission, saying "the chairman of SEC has betrayed the public trust. And if I were president, I would fire him."
But a Supreme Court ruling would suggest that the president does not have the power to fire the SEC chairman.
Commissioners of the following independent regulatory commissions cannot be removed by the president: the SEC, the Federal Reserve Board, the National Labor Relations Board, the Federal Communications Commission, and the Federal Trade Commission.
Created in the wake of the Crash of 1929, the SEC was conceived by Congress in the Securities Exchange Act of 1933, and came into being in 1934. Its commission is composed of five members, and no more than three can be of the same political party. Commissioners are nominated by the president and confirmed by the Senate for staggered five-year terms. The president designates one to serve as chair.
Former Rep. Christopher Cox, R-Calif., was nominated by President George W. Bush (to serve as commissioner and chair in 2005 after the resignation of Chairman William Donaldson, who had several "ideological" disagreements with other members of the panel. (Donaldson, also a Bush nominee, has since endorsed Sen. Barack Obama, D-Ill.)
The courts have generally upheld the independence of commissioner for executive control. In 1935, President Franklin Delano Roosevelt fired a member of the Federal Trade Commission, an act the U.S. Supreme Court ruled unconstitutional.
However, a U.S. District Court of Appeals ruling that SEC Commissioners are "subject to removal by the President for cause; its chairman is selected by and serves at the pleasure of the President" makes this as a legal matter somewhat muddier.
SEC experts with whom we’ve spoken say they believe the president still cannot "fire" the SEC chairman without serious "cause" (treason, high crimes) because of the Supreme Court precedent, but the U.S. District Court ruling makes this more of an unresolved legal question. The SEC itself has not weighed in.
That said, presidents in the past have attempted to remove commissioners and chairmen who have proven "uncooperative," and others — including a key adviser to Obama — have attempted to exert political pressure to force the resignations of commissioners of these agencies.
In the wake of the Enron scandal in October 2002, Democratic congressional leaders Sen. Tom Daschle, D-S.D., and House Minority Leader Dick Gephardt, D-Mo., wrote a letter to President Bush and held a press conference, demanding that then-SEC commissioner Harvey Pitt resign.
"The Democratic leaders of the Senate and House urged President Bush in a letter to oust Mr. Pitt," wrote the New York Times.
Within a month, Pitt was gone.
Daschle is a key adviser to Obama.
The McCain campaign called protests that the president cannot literally "fire" an SEC commissioner "a foolish distinction."
"Not only is there historical precedent for SEC chairs to be removed," said McCain campaign spokesman Tucker Bounds, "the president of the United States always reserves the right to request the resignation of an appointee and maintain the customary expectation that it will be delivered.”
So, can a president "fire" an SEC chairman? SEC experts say they don’t think so, not literally, no.
But colloquially, yes.
In the world of politics, pressure can be brought to bear and "resignations" can occur, as Obama’s top adviser Mr. Daschle knows well.
– Jake Tapper and Lisa Chinn
* This post has been updated with the new information about the U.S. District Court ruling.