This post is part of Notice & Comment’s symposium on Peter Conti-Brown and Sean Vanatta’s Private Finance, Public Power: A History of Bank Supervision in America. For other posts in the series, click here.

The administrative state is again at a cross roads. The Supreme Court seems poised to continue its march toward trying to fit all of government neatly into one of the three constitutionally enumerated branches.[1] An important front of this shift has been a flattening of the mechanisms through which officers of the United States may be held appropriately accountable for their actions. Waning are the days when Congress had the flexibility to create the institutions it believed were “necessary and proper” for carrying into execution important policy aims and to determine the appropriate mechanisms for accountability in conjunction with considering the impact of those mechanisms on other aims, such as the capacity to achieve important policy goals. It now appears that six members of today’s Supreme Court believe the Constitution never granted Congress such flexibility. That was a misunderstanding. Except for increasingly “narrow exceptions,” the President “may remove without cause executive officers” even when Congress provides otherwise because they “exercise that power on his behalf.” We’ll leave to the side inconvenient facts, from the Opinion Clause to cases such as Morrison v. Olson that espoused a much more flexible approach, and just accept that this is where the Court is headed.[2]

The most obvious ramification of this pivot (or correction) is to expand the President’s authority and the role of the judiciary at the expense of Congress. Ultimately, however, the resulting pain is felt not by Congress but by We the People. If the President can indeed fire almost any officer because of policy differences alone, a host of policy aims become more difficult to achieve. The aim of price stability, which empirical evidence and experience suggests is best achieved by a relatively independent central bank, is the most oft-cited example of a policy goal that can best be achieved only by limiting the President’s capacity to fire an officer at will.[3] Yet in Private Finance, Public Power: A History of Bank Supervision in America, Peter Conti-Brown and Sean Vanetta make a powerful case that it is a different hat worn by the Federal Reserve, its role as supervisor of the nation’s largest banking organizations and some others, that is the more important example of allowing Congress some flexibility when designing administrative agencies.[4]  

This is not a point that Conti-Brown and Vanetta set out to make, nor one they explicitly embrace. Although Conti-Brown is a skilled lawyer, he and Vanetta approach their work as the well-trained historians that they are; historians interested in the intersection of finance and political economy and well attuned to the modern debates shaping this intersection, but historians nonetheless. Their aim is to unearth the nature of this thing we call supervision and to understand the unique role that it plays in the nation’s efforts to limit bank runs, promote systemic stability and achieve other aims. They do this by weaving together stories of key periods and personalities, from the founding to 1980, that collectively bring bank supervision in the United States to life. Yet it is precisely because their focus is on the practice of bank supervision and the ways Congress has consistently asked more of it, rather than its constitutional underpinnings, that they succeed in demonstrating just how much is at stake in the Court’s broad reading of Article II at the expense of Article I. 

Private Finance, Public Power makes no effort to simplify bank supervision. It shows bank supervision cannot be easily summarized or explained, in part because one of its defining characteristics is that it keeps evolving to meet different and different types of demands. This is in part because banks just keep getting bigger and more complicated so keeping them safe and sound is an increasingly difficult undertaking and in part because Congress sometimes asks supervisors to play roles beyond that core function.

Using episodes that span nearly two centuries, Conti-Brown and Vanetta reveal supervision as a set of relationships and practices that are sometimes used to manage seemingly private risk, sometimes used to further the policy aims of the day and that almost always get carried out behind a veil of secrecy. (Although one of the many bits of color that make the book so worth reading is a complaint from then New York Comptroller and later President Millard Fillmore that a state law that allowed him to examine a bank only when there was a credible reason to worry about its health and to then publish the results “prevent[ed] examinations that might be useful.” PP at 42.) Taking each of these broad categories in turn adds a little flesh to their definition of bank supervision as “the space between public and private, where government actors work with private bankers to manage the risks thrown into the economy and society through the basic, foundational, and vital enterprise of banking.” PP at 4.

First and foremost, Conti-Brown and Vanetta show that bank supervisors quite often have a strong grasp of the risks that banks are assuming and the dangers those risks pose. They show that technocratic skill and expertise are key to the ways supervision has helped to stem and contain financial crises and to support the consumer protection aims furthered by deposit insurance. A new paper by researchers at the Federal Reserve and MIT provides timely empirical support for their findings. Stephen Luck and co-authors found that bank supervisors tend to identify problem banks early and tend to increase their scrutiny of those banks.[5] They further found that bank supervisory oversight plays an important role enhancing the accuracy of the financial reporting by banks and that the capacity of bank supervisors to identify problems in a timely way typically smooths the way for a more orderly resolution process.[6]

To be sure, there are some very notable exceptions, as reflected in the regional bank debacle of 2023, but that multiple methodological approaches are yielding similar findings with respect to the general capacity of bank supervisors to identify problem banks and promote stability is a testament to its importance and efficacy. This is particularly important given that Conti-Brown and Vanetta see discretion as fundamental to supervision. It is this role in filling in gaps and identifying potential weaknesses that may not be captured by the existing regulatory regime that makes supervision so distinct and necessary.

Yet Conti-Brown and Vanetta further show that supervision has never been a purely technocratic exercise. Sometimes supervisors approach the role like “management consultants,” other times like “cops on the beat.” PP at 84, 4. They also take on aims well beyond safety and soundness, as illustrated in the ways they helped to implement, and thereby sometimes blunted and sometimes sharpened, the efficacy of antidiscrimination and consumer protection laws. This is where that opacity starts to get a little more troubling, and accountability starts to become more of an issue.

The question is what to do about it. The option that is gaining the most momentum is to use the same tools used elsewhere to constrain and enhance the accountability of the administrative state: diminish the discretion supervisors have long enjoyed and which has been vital to their success in an effort to create more regularity and accountability, coupled with greater presidential control over how supervision is carried out. Conti-Brown and Vanetta’s warning about such an approach is worth quoting in full:

“Federal bank supervisors have, for 160 years, exercised extraordinary discretion over the private affairs of banks. Congress, in turn, has moved consistently over this period regarding the authority of these supervisors: with very few exceptions, that authority has only grown. We believe that the infrastructure of supervision is so entrenched in the American traditions of finance that there is virtually no path to remove it.” PP at 315.

Dan Tarullo, the Fed Governor who helped transform bank supervision after the Great Financial Crisis and an expert on the Constitution, agrees. For Tarullo, efforts to put supervision into the trans-substantive framework that so often characterizes administrative law misses much of what makes bank supervision unique. This is in part because of the iterative role that Congress has played integrating supervision into bank regulation, including through the use of intentionally broad mandates such as “safety and soundness,” and in part because of the iterative nature of the interactions between banks and supervisors that lead to relationships that do not fit neatly into a regulatory paradigm better suited to discrete interactions.[7]

It is striking that both Conti-Brown and Vanetta, who approach the topic of bank supervision as historians, and Tarullo, approaching it as a constitutional scholar and former supervisor, all highlight Congress’s role in creating the institution of supervision at the federal level and the way Congress has chosen, repeatedly and over time, to embed supervision as a cornerstone of the bank regulatory framework. It is also notable that, like central bank independence, supervision organically developed or has been replicated in other peer nations around the world and, as with monetary policy, empirical research suggests that supervisors are more effective at promoting stability when they are relatively independent of elected officials.[8] Conti-Brown and Vanetta’s exhaustive history shows that it was lived experience, and the lack of viable alternatives, that led Congress to continually place such reliance on supervision. They demonstrate the value of the distinct types of information that supervisors can develop and deploy and the distinct role supervisors can thus play in helping to promote the health of banks and the banking system and to contain crises.

This mess of ideas does not lead to any clean conclusions. Consistent with the richness and multi-dimensionality of Conti-Brown and Vanetta’s work, this brief foray into the President’s inherent authority under Article II, the implications for Congress’s authority under Article I, and bank supervision presents conundrums for which there is no elegant solution. Their showing that supervision is both absolutely vital and not easily reduced not only makes supervision a policy conundrum that merits scholarly attention but also a constitutional one. Accountability is key in any liberal democracy, and the efforts to bring the right mix of accountability mechanisms to supervision have never been perfect. Yet both Private Finance, Public Power and Tarullo’s earlier work show that being willing to delve into this messiness and take supervision on its own terms is key to trying to figure out how to create the right balance without throwing the precious baby (the distinct efficacy of supervision) out along with its bathwater.

The Supreme Court has made it clear before, also when scaling back on Congress’s authority, that “[t]he fact that a given law or procedure is efficient, convenient, and useful in facilitating functions of government, standing alone, will not save it if it is contrary to the Constitution.”[9] Although in the context of regulatory architecture, one could argue these are precisely the types of considerations that should inform the scope of Congress’s authority under the Necessary and Proper Clause, and that they should be just as pertinent when the Court interprets the Administrative Procedure Act, that does not seem to be where the Court is heading. Much, however, remains to be seen. What Conti-Brown and Vanetta make clear is that bank supervision, in all its messiness, brings to life just how much might be lost if Congress ceases to have the capacity to learn from experience and to create regulatory bodies and tools in context-sensitive ways.

Kathryn Judge is the Harvey J. Goldschmid Professor of Law at Columbia Law School.

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[1] Trump v. Wilcox; Harris v. Bessent, 605 U. S. ____ (2025), https://www.supremecourt.gov/opinions/24pdf/24a966_1b8e.pdf.

[2] U.S. Const. Article II, Section 2, Clause 1; Morrison v. Olson, 487 U.S. 654 (1988).

[3] Trump v. Wilcox; Harris v. Bessent, 605 U. S. ____ (2025), https://www.supremecourt.gov/opinions/24pdf/24a966_1b8e.pdf.

[4] The role of supervising banks is split up among three federal bodies, the Fed, the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC), who often have concurrent authority with state supervisors.

[5] Sergio Correia, Stephan Luck, and Emil Verner, Supervising Failing Banks (Working paper, March 19, 2025), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5185769.

[6] Id.

[7] Daniel K. Tarullo, Bank Supervision and Administrative Law, Columbia Business Law Review, 2022(1).

[8] Nicolò Fraccaroli, Rhiannon Sowerbutts, & Andrew Whitworth, Does regulatory and supervisory independence affect financial stability?, 170 Journal of Banking & Finance (2025), https://doi.org/10.1016/j.jbankfin.2024.107318.

[9] INS v. Chadha, 462 U.S. 919 (1983).