Latest news with #FederalReserveActof1913
New York Post
3 days ago
- Business
- New York Post
Trump is right to want to Powell out at the Federal Reserve — but not just because of interest rates
In July 1988, Mike Dukakis was leading the presidential race versus George H.W. Bush — but not for long. A little later that summer, the Democratic nominee agreed to do a photo-op in a battle tank with an army helmet perched awkwardly on his head. GOP spin masters capitalized with the now infamous 'tank ad' that lost Dukakis the election — and rightfully so. President Trump touring the Federal Reserve's headquarters with Federal Reserve Chair Jerome Powell on July 24, 2025. Getty Images The public agreed that a pointy-headed dork who tried to pass himself off as a tough guy shouldn't be anywhere near the US presidency. That's how I felt Thursday, watching the odd spectacle of Federal Reserve Chair Jerome Powell donning an ill-fitting helmet as he and President Trump toured the Fed's new unfinished and overindulgent $2.5 billion 'Taj Mahal' headquarters. Yes, Trump wants Powell out mainly because the Fed boss refuses to lower interest rates and juice the economy. But let's pause a moment to contemplate the construction-site fiasco. Trump chose to tour the facility because he wanted to make Powell look like a fool. And it worked. Like Powell, Trump, too, was wearing a helmet, but the president looked pretty comfortable as his hulking frame towered over the central banker's. Recall that Trump is a real estate developer. Powell, meanwhile, looked like an economist who had just landed on Mars. He stood by nervously as Trump took some shots at the project's well-publicized cost overruns. Powell did manage to point out that the president had mistakenly added a few hundred million dollars to the actual total, but the actual total was outrageous nonetheless. It's easy to shrug off the presser as just another day in our Trumpian soap opera. The president is a master at working the room. Powell is not — he can barely do his job setting interest rates. Yet as we debate Powell's future, the scene serves as a suitable Dukakis-like metaphor, and an indicator that maybe Trump is right, and Powell needs to go sooner rather than later. Independence is key It takes a lot for me to say that. I don't necessarily agree that we need to cut interest rates before we see the impact of Trump's possibly inflation-inducing tariffs. Plus, Fed independence from political forces is of fundamental importance. It's the reason people buy our debt and finance our standard of living. The Federal Reserve Act of 1913 gives the central bank this large degree of autonomy because if it appears the chairman is a patsy of the president — lowering rates on his orders simply to stimulate growth — investors will see our debt as worthless paper prone to the ravages of inflation. If we can't sell our debt, we will get the mother of all financial crises, one that makes 2008 look like a cakewalk. But defending Fed independence on Powell's record is a loser's game. Trump in 2017 during his first term appointed Powell and the two butted heads immediately. Trump wanted lower rates while the economy — thanks to his tax policies — was roaring. Powell initially didn't give in and for good reason: The economy was too hot. But he ultimately caved to Trump and started slashing interest rates. It's reason No. 1 he should be fired: He's far from independent. The rate cuts left the Fed with fewer policy measures when it really needed to add liquidity during the COVID lockdowns. Kept printing money Here's reason No. 2: During COVID, Powell used whatever dry powder he had in the Fed's arsenal to print money like it grew on trees. Even after businesses opened and the pandemic ended, he kept printing. Interest rates remained at zero or near zero well into the Biden presidency. (He was re-appointed by Sleepy Joe to a four-year term that ends next year.) All this occurred as Biden spent trillions of dollars, exploding our debt and setting the stage for inflation. Powell then brushed off concerns that all this continued liquidity would do more harm than good. He seemed to be working with Biden's inept Treasury Secretary Janet Yellen to spin the situation, calling the inflation 'transitory.' It wasn't. Inflation hit 9.1% before Powell began to raise rates. It was one of the worst policy mistakes ever made by a Fed chair; fighting inflation is part of his dual mandate and the most important part because it's a tax on working-class Americans who can't speculate around it in the markets. I know — I am arguing that Trump is right to get rid of Powell for the wrong reasons. Tariffs could cause higher prices and cutting rates might spike them further. And if Trump did ax Powell before his term ends, it could set up a constitutional battle royal. But it's hard to defend Powell's long track record of cluelessness on monetary policy — or his cluelessness at the construction site. The sooner he goes, the better.
CTV News
5 days ago
- Business
- CTV News
Could Trump legally fire U.S. Federal Reserve chief Powell?
U.S. President Donald Trump shakes hands with Federal Reserve board member Jerome Powell in the Rose Garden of the White House in Washington, on Nov. 2, 2017. (Alex Brandon / AP) U.S. President Donald Trump has repeatedly mused about firing U.S. Federal Reserve Chair Jerome Powell and, ahead of a visit to the U.S. central bank's headquarters on Thursday, called him a 'numbskull' for not cutting U.S. interest rates. If Trump fires Powell, he will be wading into uncharted legal territory by testing the Fed's historical independence. Can Fed board members be fired? The Federal Reserve Act of 1913, which created the central bank, says that members of Board of Governors, including the Fed chief, can be 'removed for cause by the president.' But the law does not define 'cause' or lay out any standard or procedures for removal. No president has ever removed a Fed board member, and the law has never been tested in court. So 'cause' could mean anything? Several federal laws shielding members of other agencies from being removed by the president without cause say that 'cause' can include neglect of duty, malfeasance, and inefficiency. If Powell is fired and sues, those laws could be a guide for courts to determine if Trump had cause to remove him. In enacting those protections, Congress meant to distance the agencies from the White House. They also are intended to insulate their members from politics when they issue rulings in individual cases and craft policies with far-reaching impacts, such as the monetary policy set by the Fed. And if Trump lacks cause, Powell wins? Maybe not. In several cases challenging Trump's firing of agency officials, his administration has argued that giving them any protections from removal violates his broad constitutional powers to control the executive branch. The administration could similarly claim that requiring cause to remove a Fed board member is unconstitutional, allowing Trump to fire Powell for any reason or none at all. And if Powell sued and won, the Trump administration could argue that courts lack the power to reinstate him. Government lawyers have said in some pending cases that fired officials would at most be entitled to back pay and a declaration from the court that their removal was unlawful. What has happened in recent cases? Several federal judges have ruled that Trump's firings of members of independent agencies were illegal and ordered officials to be reinstated. Appeals courts or the U.S. Supreme Court have paused those rulings pending appeals, including one involving a consumer product safety board that the Supreme Court paused on Wednesday. A Washington, D.C.-based appeals court is expected to rule soon on whether Trump had the power to remove Democratic members from two labor boards, likely teeing up a Supreme Court review. The fired officials in some of those cases have said that allowing them to be removed would open the door to Trump having virtually unfettered power over the entire executive branch and would threaten the Fed's independence. Has the U.S. Supreme Court ruled on these issues? In a 1935 ruling involving the Federal Trade Commission, the Supreme Court said the president cannot fire top officials at multi-member agencies that act like courts or legislative bodies without cause. But the court's conservative majority in recent years has viewed that ruling as an exception to the general rule that the president gets to choose who executes federal laws. The court, however, recently signaled that the Fed may fit into that narrow exception, and that the court's rulings involving other boards and commissions may not apply. In an unsigned order in May allowing Trump to remove members of the labor boards, the court said the Fed 'is a uniquely structured, quasi-private entity' with a singular historical tradition, distinguishing it from other agencies. (Reporting by Daniel Wiessner in Albany, New York; Editing by Alexia Garamfalvi and Paul Simao)
Straits Times
17-07-2025
- Business
- Straits Times
Can Trump fire Powell? He likely lacks a case, legal experts say
Legal experts have assessed that the case Mr Trump may be building to remove Mr Powell for cause is flimsy. WASHINGTON – President Donald Trump continued his assault on July 16 on Mr Jerome Powell, the chair of the Federal Reserve, saying it was 'highly unlikely' that he would fire him 'unless he has to leave for fraud'. The warning shot related to Mr Powell's handling of a renovation of the Fed's headquarters in Washington, involving a pair of buildings that are around 100 years old and undergoing a roughly US$2.5 billion (S$3.2 billion) revamp. The president and his allies have seized on the project, which kicked off in 2021, as a potential avenue to fire Mr Powell over allegations of mismanagement. But firing a Fed chair is a legally knotty endeavor and one that has not been tested in modern US history. That's because, under the Federal Reserve Act of 1913, the chair can be ousted only for 'cause', which is typically interpreted to mean malfeasance or gross misconduct. Legal experts have quickly assessed that the case the president may be building to remove Mr Powell for cause is flimsy and likely to face serious obstacles if Mr Trump follows through with his threats. 'I don't think there is a case here,' said a legal scholar at Columbia University Lev Menand, 'There has to be a showing of misconduct, and Powell would have a lot of avenues to challenge the administration if they proceed against him.' If Mr Trump fired Mr Powell, the Fed chair would be entitled to both a notice of the charges and an opportunity to be heard by the president before the firing became official, Professor Menand said. Top stories Swipe. Select. Stay informed. Business Market versus mission: What will Income Insurance choose? Singapore Over 600 Telegram groups in Singapore selling, advertising vapes removed by HSA Singapore 2 weeks' jail for man caught smuggling over 1,800 vapes and pods into Singapore Life First look at the new Singapore Oceanarium at Resorts World Sentosa Opinion AI and education: We need to know where this sudden marriage is heading Singapore Coffee Meets Bagel's Singpass check: Why I'll swipe right on that Singapore Jail for man who fatally hit his daughter, 2, while driving van without licence Sport 'Like being in a washing machine with 40 deg C water': Open water swimmers brave challenging conditions Mr Powell could then go to a US District Court and sue for a preliminary injunction reinstating him. A judge would have to determine whether the chair was likely to prevail in the case either because the process was not followed according to the law or there was insubstantial evidence supporting Mr Trump's accusations. Mr Powell has in the past indicated his intention to serve out his term as chair, which ends in May 2026, suggesting that he would not go willingly. His term on the Fed's Board of Governors does not expire until 2028. The case would most likely wind up at the Supreme Court. Fed renovations take center stage Mr Trump's animosity toward Mr Powell and the reason he wants him gone stem from the fact that the Fed has defied the president's demands to substantially lower borrowing costs, instead leaving interest rates unchanged since January. Mr Trump has argued that the Fed is costing the country a fortune in debt-servicing costs by keeping interest rates at a range of 4.25 per cent to 4.5 per cent. The president, who has blasted Mr Powell as a 'knucklehead' and a 'very stupid person,' has said the Fed should cut rates to 1 per cent. But in recent days, the Fed's renovations have emerged as a new line of attack. 'It's possible there's fraud involved with the US$2.5, $2.7 billion renovation. This is a renovation – how do you spend US$2.7 billion?' Mr Trump said on July 16. He later added: 'There could be something to that, but I think he's not doing a good job. He's got a very easy job to do. You know what he has to do? Lower interest rates.' The two historic buildings have not been 'comprehensively renovated since their construction in the 1930s,' according to the Fed. But the project has run around US$700 million over budget. Mr Trump and his top aides have homed in on the swelling costs and the inclusion of what they have described as luxury features, arguing that Mr Powell has mismanaged the process and misled Congress about the extent of the plans. The Fed has pushed back on those claims, saying it has scaled bank many of the additions that had angered Republicans. It also denied there would be a new VIP dining room or a special elevator for top officials as well as expansive use of new marble. In a bid to squash the controversy, Mr Powell asked the Fed's inspector general this week to review the project. Will Trump follow through on his threats? For the moment, Mr Trump has sent mixed signals about his true intentions for Mr Powell. At a meeting with congressional lawmakers late on July 15, the president brandished a draft of a letter firing the Fed chair, though Mr Trump said on July 16 that he had only 'talked about the concept of firing him'. Financial markets initially reacted poorly, but recovered as soon as the president appeared to walk back his threat. Still, Mr Trump continued to pillory the Fed chair over interest rates, just days after his top aides called on Mr Powell to resign – and said they would begin the search for his successor. Mr Russell Vought, the White House budget chief, also demanded that the chair respond to a set of detailed questions about the renovations by this week. Some former government officials and monetary policy experts said they believed that the president's newly raised concerns about the renovations were a poor cover for his real goal to build a Fed more amenable to swift reductions in interest rates. 'The renovation controversy is pretty clearly manufactured faux outrage to try to justify Powell's for-cause removal,' said Mr Jeremy Kress, a former Fed banking regulator who is a faculty director of the University of Michigan's Center on Finance, Law and Policy. 'Even though it's obviously pretextual, this is uncharted legal territory, and it's anyone's guess how a legal case involving the Fed chair would be decided.' Defining 'cause' Legal experts widely agreed that Mr Trump could not outright fire Mr Powell before the end of his term simply because of a disagreement over decisions related to monetary policy. Even though the Supreme Court recently empowered the president to fire the leaders of independent agencies, the justices took care to caution that their ruling did not apply to the Fed, which they described in a May order as a 'uniquely structured, quasi-private entity'. Mr Daniel Tarullo, a former member of the Fed board who is a professor at Harvard Law School, said that had amounted to a 'pretty clear statement by the court' about the special protections afforded to the Fed. But he said there had been a shift in the debate over the last few days, as the Trump administration had started to discuss publicly whether it could try to fire Mr Powell on grounds that he behaved improperly regarding its renovations. Mr Tarullo, for one, said that there was 'very little judicial precedent on what constitutes cause' in this case, and that it could vary from statute to statute, with some laws prescribing that an official can be 'removed only for inefficiency, neglect of duty or malfeasance'. NYTIMES
The Herald Scotland
23-05-2025
- Business
- The Herald Scotland
Supreme Court eases worries over Trump's ability to fire Powell
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.
USA Today
23-05-2025
- Business
- USA Today
Supreme Court says Fed is unique, easing worries over Trump's ability to fire Powell
Supreme Court says Fed is unique, easing worries over Trump's ability to fire Powell "The Federal Reserve is a uniquely structured, quasi-private entity," the court's majority wrote. Show Caption Hide Caption Powell to remain Fed chair, 'no intention' on firing him, Trump says President Donald Trump says he has no intention on firing Federal Reserve chairman Jerome Powell, but he would like to see interest rates cut. The court's order allows Trump to keep the two Democratic labor board members sidelined while they challenge the legality of their removal. The two cases have been closely watched as proxies for whether Trump has the authority to fire officials at the Fed. 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.
