Supreme Court Says Agency Ruling Does Not Apply to Fed

Bloomberg

22-05-2025

00:00
What does this decision mean for Powell, as we hear from the court about the uniquely structured entity that is the Federal Reserve? Yes. So, I mean, I'm sure that it's a sigh of relief for the Fed, although if we heard you're listening to Jay Powell last month, he was speaking in Chicago and he actually said he sort of predicted this and said that he was confident or had a feeling that the Supreme Court would kind of create some sort of exemption or at least make clear, rather, that the law treated treat the Fed differently. And that's exactly what they did today. They said that the Fed, you know, they just did not apply to the Fed because of their unique structure. And there are referred to them as a quasi private entity, which is true. I mean, the Fed was established by Congress, but there are 12 regional reserve banks that are run by private boards of directors, the Fed board, that is the officials that presumably this ruling would apply to. They are nominated by the president and confirmed by the Senate. But they the law says they can't be removed. They can only be removed for cause. So there was some some question about whether right there that the president had the power to remove them. The Fed has previously said and presumably have had their lawyers look very closely at this, that they can't be fired. So the Supreme Court seems to have agreed with that position today. So even if the Fed is insulated, knowing that this legal fight still has to play out in full, the justices aren't necessarily saying that the president definitively has this power. They're just allowing him to exercise it for now. As these other court challenges play out, are there implications for other agencies beyond the Fed or other regulators? It certainly seems that way. I mean, as you said, it's a it's a stay it's a temporary decision. We'll have to see what the what the final outcome is. We saw that there were a few liberal justices that dissented from this. But clearly, the the direction that the court is headed seems seems to be that they're you know, that they're somewhat sympathetic to this argument that the president has this power. But that's that's the worry, right. That this could have much farther reaching implications than just for these two agencies.