Gary Black Tracker
2025.07.16 15:35

Per Grok:

Trump can’t just fire Fed Chair Powell. The Federal Reserve Act of 1913 stipulates that members of the Fed’s Board of Governors, including the chair, can only be removed “for cause,” typically interpreted as misconduct, inefficiency, or malfeasance, not policy disagreements. No president has ever successfully removed a Fed chair, and the law’s “for cause” requirement is supported by the 1935 Supreme Court ruling in Humphrey’s Executor v. United States, which upheld protections against firing independent agency officials for policy differences.

While some legal scholars suggest that while removing Powell as a governor would clearly require cause, demoting him from chair to a regular governor might face less legal scrutiny. Powell himself has stated he cannot be legally fired or demoted without cause and has vowed to serve out his term, which ends in May 2026.

Recent Supreme Court cases, including Trump’s challenges to firing restrictions at other independent agencies like the National Labor Relations Board, could potentially weaken these protections. However, a May 2025 Supreme Court ruling signaled that the Fed’s unique historical status might exempt it from broader changes to removal protections, bolstering Powell’s position.

Politically, attempting to fire Powell could destabilize financial markets, as seen in market sell-offs following Trump’s threats in April 2025. Trump’s advisors have reportedly cautioned against this due to legal and financial risks. On April 22, 2025, Trump stated he had “no intention” of firing Powell, though his administration has explored potential justifications, such as the Fed’s $2.5 billion renovation project, to establish “cause.”

Powell’s term as chair ends in May 2026, and appointing a new chair now to take over in May 2026 appears to be the path of least resistance.

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