Which of the following is an example of an Independent Regulatory Agency?

• A. Federal Bureau of Investigation
• B. Federal Reserve Board
• C. Central Intelligence Agency
• D. Environmental Protection Agency

Answer: (B)

Independent regulatory agencies regulate important areas of public policy with rules that operate apart from the President’s day-to-day control. The Federal Reserve Board fits this model because its seven governors are appointed for long, staggered terms, and its decisions on monetary policy and banking supervision are made with a level of insulation from political pressure. It sits outside the cabinet structure and has its own funding and governance, which is the hallmark of an independent regulator. The FBI is part of the Department of Justice and follows presidential direction through the attorney general; the CIA is part of the intelligence community and does not set regulatory rules; the Environmental Protection Agency enforces environmental laws but is not organized around the same independent regulatory framework as the Fed.