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From the Fact Check Desk: Could McCain 'Fire' the SEC Chairman?*

September 18, 2008 3:24 PM

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.

September 18, 2008 | Permalink | Share | User Comments (57)

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If I were Mr. America community organizer, I´d nominate Reszko, Ayers, Rev. Wright or Barbra Streisand for commissioners. Those would be wonderful appointees.

Posted by: Stephen from Indiana | Sep 18, 2008 7:11:02 PM

Lately McCain seems to be slipping often. If he does this in the debates the story becomes his age.

Posted by: DMR | Sep 18, 2008 6:36:43 PM

McCain is a Republican Senator. As a Republican Senator, he approved Cox for the position because Cox agreed that, under no circumstance should Government regulate the securities industry. Cox did exactly what McCain and the other Republican Senators hired him to do. As a Senator, McCain ought to know that the President can't fire Cox. But hey, facts don't matter. Rules don't matter. Gut feelings matter and the consequences be damned!!! Just what we need in the White House, another stubborn, hot tempered ideologue.

Posted by: thebob.bob | Sep 18, 2008 6:24:03 PM

Edward Henderson wrote (with corrections): "The people of California are using our oil and gasoline extracted from our Coast, the Gulf Coast."

You might want to do your homework. According to the 2006 statistics: 39% of California's crude oil comes from California; 16% comes from Alaska; and 45% is from out of the country (Saudi Arabia-13%; Ecuador-11%; Iraq-9%; Brazil-3%; Angola-2%; Mexico-2%; and the remaining 5% comes from Columbia, Oman, Venezuela and Argentina).

Sorry not a drop from the Gulf Coast.

Posted by: James Danley | Sep 18, 2008 6:14:09 PM

If I were Palin, the one from the Palin-McCain ticket, I would fire McCain.

If I were McCain I would Palin home before it is too late.

Posted by: kirsten | Sep 18, 2008 6:13:58 PM

From:
Head of State

Thursday, September 18, 2008

ABC News:

"At a joint rally in Cedar Rapids, Iowa Thursday, Republican John McCain slammed the Security and Exchange Commission (SEC) for being "asleep at the switch" saying that if he were president, he would fire Chris Cox, the chairman of the SEC since 2005 and a former Republican congressman...
But while the president nominates and the Senate confirms the SEC chair, a commissioner of an independent regulatory commission cannot be removed by the president."

Perhaps he could name him President of Spain.


Posted by: emily | Sep 18, 2008 5:54:42 PM

Given all the people she's managed to fire during her short tenure in public life, maybe Sarah's "firing" spirit is getting to him. If he is elected and does fire the head of the SEC, I hope he doesn't follow her example and fill the post with a high school classmate.

Posted by: Brooklyn Democrat | Sep 18, 2008 5:49:02 PM

and by the way, California, you cannot even get your house in order. Quit acting like you are the cat's meow and get your own state's finances in order. You have no right to criticise anyone when you can't budget yourselves.

Posted by: Edward Henderson | Sep 18, 2008 5:25:56 PM

So Palin canceled visits to California. The people of California are using our oil and gaoline extrated from our Coast, the Gulf Coast. The people of California are too darn stupid to drill offshore their coast so that they could help our nation a bit from the foreign oil obtained from nations who are hostile to us and to whom we pay $$$$$$$$$$$$$$$$$$$. California, wake up and smell the damn oil.

Posted by: Edward Henderson | Sep 18, 2008 5:22:59 PM

Chris Cox was appointed to do exactly what he has been doing, which is NOTHING! Bush, and McCain, were all about de-reg and part of that was gutting the regulatory bodies and neutering the oversight.

Now he's McCain's scapegoat, even though he was doing what he was hired for. Pretty disingenuous on McCain's part.

He's not bringing up Phil Gramm a lot these days, is he.

Posted by: Pupster | Sep 18, 2008 5:11:32 PM

I personally would FIRE all of Washington and start over, and that includes Bush!

Posted by: beck | Sep 18, 2008 4:59:31 PM

Though a president cannot fire any member of the SEC, in the sense of forcing a resignation from the Commission, he does have unquestioned authority to remove the chairman from his chairmanship and designate another existing member of the Commission to serve as the new chairman.

Posted by: Marco | Sep 18, 2008 4:58:57 PM

JohnTX wrote: "He's the Architect of the Iraq war that got 4,000 of our troops killed and cost us $1.5 trillion. He wrote the policy 3 years before 9/11 that called Iraq a terrorist state even though we now know Saddam hated religious extremists."

First of all, the current Battle of Iraq is a resumption of the 1991 Gulf War. After 12 years of attempting to diplomatically convince Saddam Hussein to comply with the conditions of the 1991 cease fire, President Bush rescinded the cease fire. Read the 2002 Joint Resolution to Authorize the Use of United States Armed Forces Against Iraq!

Now then, where in the world do you get the notion that terrorists have to be religious extremists? Saddam Hussein gave over $10 million to the families of the Palestinian suicide bombers (up to $25,000 per family).

Finally, actually WE NOW KNOW that between 1999 and 2002, Saddam Hussein trained over 8,000 "radical Islamic terrorists" in several terrorist training camps within Iraq.

Iraq WAS a terrorist state!

Posted by: James Danley | Sep 18, 2008 4:57:08 PM

I would agree with that except that these are fundraisers for both the national & state party and they will be without the star of the party right now vs say rallies.

With McCain relying heavily on the RNC for funding, I don't understand why the VP would cancel fundraiser appearances. That's what VPs are supposed to do, raise cash while the candidate is out campaigning.

Posted by: Ryan C | Sep 18, 2008 4:41:51 PM

I guess if Governor Palin can fire people all willy nilly, surely the POTUS can do so :)

Posted by: MyAudacity | Sep 18, 2008 4:36:48 PM

Jake, you got played by the McCain campaign. I'm assuming you got this bit about McCain being "attacked" by the Obama campaign for saying he'd fire the SEC chief from Brian Rogers. Well, if you read Rogers's statement carefully, you'll note that he doesn't say McCain has been attacked by the Obama campaign; rather, he says the Obama campaign is "about to" attack McCain. In other words, as Talking Points Memo points out, the McCain campaign is preemptively attacking Obama for something he hasn't done.

Posted by: Gretchen | Sep 18, 2008 4:32:00 PM

Having political appointees as the head of agencies causes considerable issues. Independence is lost

Congress frequently calls agencies heads to complain that the agency is being unfair to business. The average citizen rarely gets the attention of Congress, but the big money people are on first name relationships.

Posted by: Jim | Sep 18, 2008 4:27:55 PM

Ryan C: "Palin just canceled her appearance at two big fundraisers in CA.

I wonder what's going on."

Is it moose-hunting-season?

Or maybe there's another unplanned expansion of her family? Who knows.

Posted by: Willem van Oranje | Sep 18, 2008 4:24:22 PM

Ryan, easy. Republicans hate California. Except when they really need money. But otherwise they really hate California. Well, except when they need a celebrity President. Otherwise, they really hate California, except when they need food. Otherwise, they really hate California.

Posted by: johnTX | Sep 18, 2008 4:19:15 PM

Rep. Wayne Gilchrest, a maverick Republican from Maryland, endorsed Illinois Democratic Sen. Barack Obama for president in an interview Wednesday with WYPR, Baltimore's National Public Radio station.

Wait, McCain is now the populist now right? Can you be a populist and a maverick at the same time?

Has the word 'maverick' just entirely lost its meaning at this point?

I swear, I'm just going to call everyone a maverick. You know George Bush is a maverick right? Oh and Bill Clinton was a maverick and Richard Nixon was a maverick and JFK was a maverick...

Posted by: johnTX | Sep 18, 2008 4:16:54 PM

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