Identity-Conscious Administrative Law: Lessons from Financial Regulators

Abstract

Administrative law’s conventional mechanisms for bolstering democratic accountability are under strain. Open-access procedures like notice-and-comment rulemaking promise to inject a dose of popular responsiveness into agency decision-making. Well-resourced groups’ outsized use of these measures, however, causes that promise to remain unfulfilled. Likewise, assertions that the White House welds a democratic link between administrators and the public—although ascendant in the courts—rest on rusty assumptions about the President’s responsiveness to majority preferences, let alone to a national will.

This Article spotlights an overlooked set of identity-conscious measures to enhance agencies’ accountability to the public. Counterintuitively, these measures further this goal by explicitly elevating certain subgroups. From representational mandates for independent commissions to consultation requirements with outside groups, these structures are planted across the administrative state, and are particularly common in financial regulatory agencies. Yet they are virtually ignored by scholars and never before considered collectively.

The Article presents, for the first time, a full accounting of administrative law’s myriad identity-conscious measures. In-depth case studies concerning the Federal Reserve and Securities & Exchange Commission reveal that these measures are surprisingly efficacious. Most importantly, they help correct for power disparities that are present in the use of administrative law’s more familiar, identity-neutral mechanisms for public influence. These findings offer a prescriptive blueprint; to redress inequities, respond to challenges to the administrative state’s democratic bona fides, and ultimately improve decision-making by fostering deliberation among diverse actors, policymakers should turn their attention to identity-conscious agency design.

Keywords: agency design, administrative law, substantive equality, financial regulation

JEL Classification: K22, K23, H11