U.S. Supreme Court shields Fed but lets Trump fire agency leaders
The U.S. Supreme Court shielded the Federal Reserve from Donald Trump's push to fire top officials at independent federal agencies, in a decision likely to quell concerns that the president might remove Jerome Powell.
In a ruling Thursday that let Trump oust officials at two other agencies, the court said its decision wouldn't apply to the Fed, calling it a "uniquely structured, quasi-private entity.'
The decision provides a measure of clarity about Powell's job security after a period of uncertainty. Trump last month sent conflicting signals, posting on April 17 that "Powell's termination cannot come fast enough!' before telling reporters April 22 that he has "no intention of firing him.'
The unsigned ruling, which grants a Trump request, means National Labor Relations Board member Gwynne Wilcox and Merit Systems Protection Board member Cathy Harris can't return to their jobs as their legal challenges continue. It extends a temporary order Chief Justice John Roberts issued on April 9, when he let Trump remove the two officials and override job protections Congress created for both roles to insulate them from White House control.
Wilcox and Harris, both Democrats, had argued that letting Trump remove them would leave Powell vulnerable, along with the Fed's independence.
The court said in its unsigned order that it disagreed with Wilcox and Harris' contention that "arguments in this case necessarily implicate the constitutionality of for-cause removal protections for members of the Federal Reserve's Board of Governors or other members of the Federal Open Market Committee.'
The court said it wasn't making a final decision in the Wilcox and Harris cases given that the litigation remains at an early stage. But the majority said the president "may remove without cause' officers who exercise executive power, subject to narrow exceptions.
While the decision shields the Fed, it's likely to bolster Trump's ability to remove officials at other agencies, including the Federal Trade Commission and the Federal Communications Commission. The administration is separately defending against a lawsuit by two FTC commissioners fired by Trump.
The case is testing a 1935 Supreme Court ruling, known as Humphrey's Executor, that let Congress shield high-ranking officials from being fired, paving the way for the independent agencies that now proliferate across the U.S. government.
Writing for three liberal justices in dissent, Justice Elena Kagan blasted the court's decision to permit the firings as "nothing short of extraordinary,' saying it "allows the president to overrule Humphrey's by fiat.' She said the decision had forced the majority to create "a bespoke Federal Reserve exception.'
"I am glad to hear it, and do not doubt the majority's intention to avoid imperiling the Fed,' Kagan said. But, she added, "if the idea is to reassure the markets, a simpler — and more judicial — approach would have been to deny the president's application for a stay on the continued authority of Humphrey's.'
Fed watchers have been eagerly awaiting a Supreme Court decision to see if the court would back a carve-out for the central bank.
Trump's criticism of the Fed for not lowering interest rates and his threats to fire Powell came to a head in markets last month when the president's repeated statements exacerbated a bond rout. After Trump insisted he wasn't planning to fire the Fed chief, markets calmed.
Powell, a lawyer by training, has repeatedly insisted that his firing would be illegal and said in April that he didn't think the Supreme Court ruling in the NLRB and MSPB cases would apply to the Fed.
The Fed has closely guarded its independence over the past few decades. Economic research shows that countries whose central banks operate without interference from politicians or election cycles tend to have more stable prices and better economic outcomes.
Trump turned to the Supreme Court after a federal appeals court in Washington issued a preliminary ruling against him and let Wilcox and Harris briefly return to their jobs.
Trump's removal of Harris and Wilcox has left their respective agencies — the three-member MSPB and the five-member NLRB — without a quorum to function. The merit board handles labor-related claims from U.S. agency employees and recently has presided over challenges to Trump's efforts to shrink the federal workforce.
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