Let me begin by echoing Daniel’s thanks to Chris, the Yale Journal on Regulation’s Notice and Comment team, and Peter for the opportunity to reach outside my scholarly comfort zone and hopefully play a useful role in illuminating the importance of Peter’s book not only for scholars of the Federal Reserve system but the legal academy more broadly.

The Power and Independence of the Federal Reserve is so rich with lessons about administrative agencies’ institutional design, path dependence, interagency boundary policing, and idiosyncratic leadership, it is difficult to decide which of those lessons to prioritize and apply elsewhere. For this post in the symposium inspired by his work, I consider Conti-Brown’s analysis of Fed “independence”, a concept he strips of its mystery and calls it for what it is: the separation of bread-and-butter politics (including political accountability) from the decision-making structures surrounding the Fed’s monetary, regulatory, and supervisory functions. Conti-Brown accomplishes this by historical analysis of the initial ascent and then retreat of Treasury and OCC officials in the governance structure of the Federal Reserve, individual assessment of how specific Chairs (emphasizing William McChesney Martin and Alan Greenspan) navigated relationships with Executive and Legislative Branch doubters and interlopers, and how the structure of the Federal Open Market Committee (including information disclosure practices), the subject matter of its oversight, and its self-financing practices fend off intrusion by not only the political branches but by the federal judiciary as well.

Conti-Brown’s analysis of the Fed including his recommendations for change are usefully explored in the context of the Food and Drug Administration. The Commissioner of Food and Drugs (FDA Commissioner), almost always a highly decorated public health official, is frequently imagined to be “independent” like the Chair of the Federal Reserve’s Board of Governors (and the FOMC itself); the FDA is conventionally understood to enforce violations of the food and drug laws – especially the branding and labeling of products — based on crystal clear statutory mandates and technocratic expertise; and, the process of many drug and medical device approvals is thought to operate with a strict separation between private sector applicants and the official, scientifically methodical FDA reviewing authority (Center for Drug Evaluation and Research, Center for Tobacco Products, Center for Veterinary Medicine, etc.).

The reality of the FDA Commissioner’s independence is more complex. The FDA Commissioner is not only selected through presidential appointment and Senate confirmation (a reform Conti-Brown suggests for a larger number of Fed leadership positions), his or her “independence” varies depending on whether Congress has directly empowered him or her to play a role at the apex of a regulatory regime or whether his or her authority is subject to the complexities of the Department of Health and Human Services bureaucracy. Even in regulatory contexts where the FDA Commissioner is subordinate to the Secretary of Health and Human Services, he or she may use non-legal capabilities of the office to influence regulatory policy (or may work in partnership with the Secretary to shape public perceptions). For example, after the FDA’s Center for Drug Evaluation and Research determined that an emergency contraceptive containing levonorgestrel (“morning after pill”) was safe and effective for nonprescription use for females under 17 years of age (it had already received approval for nonprescription use), FDA Commissioner Margaret Hamburg noted that she had “reviewed and thoughtfully considered the data, clinical information, and analysis provided by CDER, and [agreed] with the Center that there is adequate and reasonable, well-supported, and science-based evidence that Plan B One-Step is safe and effective and should be approved for nonprescription use for all females of child-bearing potential” but, given the position of the Secretary of Health and Human Services “invoking her authority under the Federal Food, Drug, and Cosmetic Act to execute its provisions and stating that she does not agree” with CDER’s assessment, withheld the approval. The statement eventually provided a basis for a court to review the Secretary’s decision. Consistent with Conti-Brown’s analysis, there is nothing talismanic about even deeply technical issues surrounding drug and medical device assessment and approval (like monetary policy) that should remove them from prudently designed regulatory and accountability structures. In the scenario described above, however, a meaningful possibility for judicial review plays a critical role.

Similarly, FDA’s enforcement behavior is not only a manifestation of decades of boundary policing with other federal agencies (particularly the Federal Trade Commission – a 1954 MOU between FDA and FTC with respect to health claims plays a similar role to the Fed-Treasury Accord) and legal positions forged in the ambiguities of statutory text, it is often conducted as a collaboration with its targets. Addressing violations of good manufacturing practices at a facility that provides a scarce medication almost must proceed as collaborative enforcements or the FDA will betray its principal mandate – to protect individual and public health. The same is true of its approval processes for drugs and medical devices which are often far better understood as collaborations regarding the creation and submission of safety and efficacy data; branding and labeling information; and, post-marketing surveillance requirements. That the FDA works so closely with industry as part of its review mandate raises serious, well-documented concerns with respect to regulatory capture, to say nothing of the user-fee system that funds much of its operations and the statutorily required (and troubling) presence of industry representatives on influential bodies like the Tobacco Products Scientific Advisory Committee.

Conti-Brown spends a great deal of time alerting readers to the capture risks that face the Fed: the structural weaknesses of the Fed’s Open Market Committee (especially churning and unfilled Governor seats), the critical and essentially under-regulated role of the President of the Federal Reserve Bank of New York, and the failure of the federal judiciary to review the Fed with the same rigor it readily applies to agencies like the EPA, the FCC, and, certainly, FDA. Conti-Brown provides a more nuanced assessment of how this “capture” works at a cultural and lexicological level, and how it may be more effectively understood for purposes of better policy and regulation.

There is much more that students of administrative agencies like the FDA may take away – the curious perhaps inexplicable way that early attempts at federalism in the Federal Reserve system facilitated the arguably excessive influence of regulated banks; the critical role the Presidential-Governor Chair relationship plays in determining Fed policy; and, the ways in which the Fed’s functions (monetary, supervisory, and regulatory) have been prioritized and/or neglected by Congress, the Executive, and the Federal Reserve Board of Governors itself. A blog post often provides only the space necessary to highlight the intriguing and valuable components of a work like Conti-Brown’s. It is worth noting in conclusion that for every administrative agency that is the subject of scholarly scrutiny, there is an entire law review article’s worth of comparison and contrast with what Conti-Brown has exposed about the structure and regulation by and of the Federal Reserve system.

This post is part of an online symposium reviewing Peter Conti-Brown’s new book The Power and Independence of the Federal Reserve. You can read the entire series, as well as other posts on the Federal Reserve, here.