Trump might fire Jerome Powell, but it could spark a legal war like nothing America's seen before

Time of India

5 days ago

US President
Donald Trump
is once again questioning whether Federal Reserve Chairman
Jerome Powell
should continue in his position. However, removing Jerome Powell could result in a legal battle unlike any other in American history.
From Supreme Court precedents to agency independence, this potential battle is already taking shape behind the scenes. Donald Trump may want to fire Fed Chairman Jerome Powell, but doing so could spark a complicated legal battle. With only 10 months left in Powell's term, Trump may simply wait him out.
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The Fed Chair has been clear about his intentions. His removal is "not permitted by law," he stated earlier this year, and he would not leave if Trump attempted to fire him.
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The Wall Street Journal claims that Fed officials have been secretly preparing for a legal battle since Trump's first term, when the president also considered firing the chair.
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What makes firing Jerome Powell legally complicated?
Jerome Powell's case is strong because it relies on certain
Fed autonomy protections
that are already included in US law. The Federal Reserve Act, which established the central bank in 1913 and was revised in 1935, stipulates that each Fed board member will serve for a period of 14 years "unless sooner removed for cause by the President,' as per a report.
Powell is protected under federal law unless he is removed "for cause," which has never been fully tested in court.
The "for cause" requirement was designed to increase the Fed's independence by making it more difficult for a president to remove its president-appointed board members.
Although the Supreme Court's stance on the matter is unclear, there are indications that the court would intervene if Trump took action, as per a report.
Just this week, a federal judge ruled that Trump's prior firing of FTC Commissioner Rebecca Slaughter was illegal, citing a 1935 Supreme Court case, Humphrey's Executor v. United States, that limited the president's power to remove leaders of independent agencies.
The judge referenced a Supreme Court decision from ninety years ago that restricts the president's authority to fire independent agency board members unless there is negligence or misconduct. Powell has some protection from that precedent.
What does 'for cause' really mean in this context?
While the law says 'for cause,' it doesn't define exactly what that means in the context of firing the chair of the Fed, especially since the statute doesn't specifically reference the chair's role.
Historically, 'for cause' has been interpreted to mean serious misconduct, like inefficiency, neglect of duty, or malfeasance. But so far, those standards haven't been tested in court for a Fed chair.
Now, Donald Trump and his allies are suggesting a potential reason: the $2.5 billion renovation of the Fed's Washington headquarters. Trump recently claimed there might be fraud involved in the project, telling reporters, 'It's possible there's fraud,' and hinting that it 'sort of is' a fireable offense.
Although he clarified that he wasn't actively planning to remove Powell, Trump also said, 'I don't rule out anything.'
Kevin Hassett, former National Economic Council director and a rumored contender to replace Powell, said last weekend that the question of presidential firing authority is 'being looked into.' Still, he called it a 'highly uncertain legal matter.'
Behind the scenes, White House officials appear unsure of their legal footing. According to Politico, outside attorneys warned that firing Powell over the renovation project would likely not hold up in court. One anonymous official even admitted, 'Whether or not it's illegal, I don't know. But is it a good thing to point out to damage this guy's image? Yeah.'
Could Donald Trump actually pull it off before Powell's term ends?
While the legal challenges would be significant, time may actually be Trump's biggest obstacle. Powell's term ends in less than a year, in May 2026. Some legal scholars think Trump may ultimately decide to let the clock run out.
Eric Chaffee, a business law professor at Case Western Reserve University, said he believes Powell would win any court fight. But more importantly, Chaffee says Trump may not see the battle as worth it.
FAQs
Can Donald Trump legally remove Jerome Powell?
Not easy. U.S. law requires "cause" for firing a Fed board member, and Powell has stated that he will oppose any such move.
What does Donald Trump accuse Powell of?
To justify a potential dismissal, Trump and allies have cited a $2.5 billion Fed building renovation, raising unproven fraud concerns.