A U.S. Supreme Court May 22 ruling in a legal battle over President Donald Trump’s firing of two federal labor board members contained a line that eased, for now, worries that the cases could open the door for Trump to fire Federal Reserve Chair Jerome Powell at will.
The court’s order allows Trump to keep the two Democratic labor board members sidelined while they challenge the legality of their removal.
Lawyers for Gwynne Wilcox, who was removed from the National Labor Relations Board, and for Cathy Harris, who was dismissed from the Merit Systems Protection Board, had argued that a ruling in favor of the Trump administration could undermine legal protections for Fed policymakers long seen as being insulated from presidential dismissal for reasons other than malfeasance or misconduct.
“We disagree,” a majority of justices said in the court’s brief, unsigned ruling. “The Federal Reserve is a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks.”
The two cases have been closely watched as proxies for whether Trump has the authority to fire officials at the Fed. The Federal Reserve Act of 1913 that created the nation’s third and still existing central bank stipulates that Fed officials may be dismissed only “for cause,” not for political or policy disagreements.
“This view of the Supreme Court really does ease my worries about their inclination to extrapolate from the NLRB cases to the Fed so I breathed a sigh of relief,” said LH Meyer analyst Derek Tang, who has followed the cases closely.
Trump has repeatedly lashed out at Powell, whom he nominated to the post during his first term and who was renominated to a second term by Democratic President Joe Biden, and said he wants to see him gone from the central bank. Though Trump, who has attacked Powell over the Fed’s decision to not lower interest rates, recently said he has no intention of trying to fire Powell, the possibility has unsettled financial markets that bank on an independent Fed’s ability to do its job without political interference.
Powell has said he believes his firing would not be permitted under the law.
The Fed system’s seven governors, including the system chair, are appointed by the president and confirmed by the Senate. Powell’s term ends in May 2026, and Trump is expected to nominate a successor in the coming months.
Krishna Guha, a vice chair at Evercore ISI, said the Supreme Court’s opinion was encouraging but not definitive. “It strictly only addresses whether a ruling on Wilcox would ‘necessarily’ implicate the Fed,” he said
A Fed spokeswoman did not have a comment.
This article originally appeared on USA TODAY: Supreme Court eases worries over Trump’s ability to fire Powell
