Fed Chair Powell Safe as SCOUTS Limits Trump’s Firing Power/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ The U.S. Supreme Court ruled Thursday that federal agency board members can be fired without cause—but signaled the Federal Reserve is an exception. The statement relieved concerns over Donald Trump’s ability to oust Fed Chair Jerome Powell. Financial analysts welcomed the clarification, though uncertainty remains.
Trump, Fed, and Firing Power + Quick Looks
- Supreme Court rules Trump can fire board members, but not necessarily Fed officials.
- Fed’s unique structure shields Powell, easing market fears of political interference.
- Trump has criticized Powell, but recently said he won’t seek his removal.
- Court cites 1913 Federal Reserve Act, which allows removal only “for cause.”
- GOP-appointed majority backs broader presidential power, triggering liberal dissent.
- Justice Kagan warns of power shift, calling decision a threat to agency independence.
- Court maintains Trump’s firings of two board members, pending full case review.
- Analysts relieved Fed is treated differently, but stress future legal risks.
Fed Chair Powell Safe as Supreme Court Limits Trump’s Firing Power
Deep Look
WASHINGTON — The U.S. Supreme Court on Thursday ruled that President Donald Trump likely has the constitutional authority to fire board members of independent federal agencies without cause—but also offered a key reassurance that this precedent does not necessarily apply to Federal Reserve Chair Jerome Powell.
The high-stakes decision was closely watched for its implications on the independence of the U.S. central bank. Financial analysts and policymakers feared a ruling in favor of sweeping presidential firing power could give Trump legal backing to remove Powell, whom he has criticized repeatedly. But the court drew a distinct line.
“The Federal Reserve is a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks,” the majority wrote in a brief, unsigned opinion.
That single line effectively eased immediate concerns that the central bank’s independence could be undermined. Trump, who nominated Powell during his first term, has expressed frustration with the Fed’s refusal to aggressively cut interest rates. However, he recently said he does not plan to fire Powell, whose current term runs through May 2026.
Still, his past threats—including an April comment that Powell’s “termination cannot come fast enough”—rattled financial markets and raised red flags among central bank defenders.
The Case at Hand: NLRB and MSPB Firings
The court’s decision stemmed from Trump’s removal of Gwynne Wilcox from the National Labor Relations Board and Cathy Harris from the Merit Systems Protection Board, both of whom were appointed by President Joe Biden. Trump’s administration argued that the Constitution grants the president broad authority to remove officials, even those serving in independent roles.
The Supreme Court upheld Trump’s authority—at least temporarily—by halting a lower court ruling that had reinstated Wilcox and Harris. While not a final verdict, the action reinforces the court’s willingness to revisit and potentially overturn long-standing precedents that protected agency independence, such as the 1935 Humphrey’s Executor decision.
“Not since the 1950s—or even before—has a President, without a legitimate reason, tried to remove an officer from a classic independent agency,” Kagan wrote. “That way lies chaos.”
She warned that the court’s majority appeared poised to hand the president control over agencies designed to operate beyond the reach of daily politics.
“The impatience to get on with things—to now hand the President the most unitary, meaning also the most subservient, administration since Herbert Hoover (and maybe ever)… reveals how that eventual decision will go,” Kagan added.
Despite the political and legal tension, Solicitor General D. John Sauer, representing the Trump administration, clarified that the firing of Federal Reserve officials presented “a distinct question” and should not be conflated with the NLRB and MSPB cases.
Financial Community Reacts
Economists and policy analysts welcomed the Supreme Court’s limited scope regarding the Fed.
“This view really does ease my worries… I breathed a sigh of relief,” said Derek Tang, a Federal Reserve watcher with LH Meyer. “The Court seems to understand that the Fed is different.”
Krishna Guha of Evercore ISI agreed, though cautiously.
“It strictly only addresses whether the ruling on Wilcox would ‘necessarily’ implicate the Fed,” he said, noting that the court left the door open to future challenges.
The ruling also leaves the federal labor and merit boards in limbo. Trump has not appointed replacements for the ousted members, hampering both agencies’ ability to act on pending cases.
Wilcox, notably the first Black woman to serve on the NLRB in its 90-year history, had just begun a second term when she was removed. Legal challenges from her team argue the firings are illegal without proper notice or cause.
For now, Powell remains protected under the Federal Reserve Act of 1913, which allows dismissals only “for cause.” But with Trump expected to name a successor before Powell’s term expires, questions of central bank independence may again resurface.
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