The Liberal Tilt of Financial Regulators

Abstract

In contrast to the mandated bipartisanship of the SEC Commissioners, we find a strong liberal tilt among 4,500 SEC agents tasked with implementing financial regulation. Democrats outnumber Republicans four to one and dominate all regional offices. This liberal tilt increases in senior ranks, grows over time, and persists across administrations. It reflects agents’ sorting on preferences for public service correlated with partisanship. Political misalignment between enforcement attorneys and defendants is associated with a lower likelihood of case dismissal, greater monetary sanctions, more industry bars, and compulsory governance interventions. Career attorneys represent a significant regulatory force distinct from political appointees.

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