As U.S. President Donald Trump threatens to remove Federal Reserve Chair Jerome Powell, Yahoo Finance reported Sunday that such a dismissal would require approval from the U.S. Supreme Court, the nation’s highest judicial authority.
Trump has already petitioned the Supreme Court to approve his decisions to dismiss the heads of two other independent agencies—the National Labor Relations Board and the Merit Systems Protection Board.
If the court grants those requests, Trump may be able to move forward with removing Powell as well.
Trump made his intentions clear last week through a post on Truth Social, indicating that Powell’s dismissal could happen soon.
The Wall Street Journal, one of the top U.S. financial newspapers, reported that Trump has been discussing Powell’s removal for several months. He has reportedly already interviewed former Fed Governor Kevin Warsh to potentially nominate him as Powell’s replacement.
Kevin Hassett, Chair of the White House National Economic Council, also admitted on Friday that Trump’s team is seriously considering whether to dismiss Powell.
Powell has repeatedly emphasized that his removal is not permitted by law, citing the legal framework that ensures the Federal Reserve’s independence.
Constitutional law experts agree that the situation is legally, politically, and financially complex, making it difficult to predict whether Trump will succeed in enforcing his will.
The argument for Trump’s authority to remove members of independent agency boards centers on Article II of the U.S. Constitution, which grants the president the power to ensure laws are faithfully executed.
The first U.S. Supreme Court case to address presidential removal authority dates back to the 1920s. In 1925, the Court ruled that the president could dismiss a postmaster for neglect of duty.
However, in 1935, the Court rejected President Franklin D. Roosevelt’s attempt to remove a Federal Trade Commission (FTC) commissioner.
President Herbert Hoover appointed William Humphrey to the FTC in 1925, and he was reappointed in 1931.
After Roosevelt took office in 1933, he sought to dismiss Humphrey for not sufficiently supporting the New Deal.
The Supreme Court, however, ruled that the president had no authority to remove the FTC commissioner.
The Court held that the president’s power to dismiss public officials is limited to executive officers directly involved in administration. It does not apply to heads of independent agencies like the Fed or FTC, which perform quasi-legislative and quasi-judicial functions.
By distinguishing such regulatory bodies from standard executive agencies, the Court set a precedent that makes it unlikely Trump could easily remove Powell, according to Yahoo Finance.
