From the Wall Street Journal, April 16:
Justices are revisiting ‘Humphrey’s Executor,’ a decision barring presidents from firing certain federal officials for purely political reasons
Investors are already fretting about the safety of the dollar and Treasury debt. The Supreme Court might be about to give them even more reason to worry.
The court is about to take up a question that, while not directly about the Federal Reserve, could determine whether President Trump can fire the Fed chair.
There’s no indication the justices will give the president that authority. And if they did, Trump wouldn’t necessarily sack Jerome Powell, whom he nominated.
But granting the president that power would effectively eviscerate the central bank’s independence by making its seven governors, including the chair, at-will appointees of the president, like the Treasury secretary.
Investors would henceforth conclude that monetary policy no longer solely reflects the Fed’s judgment about inflation, employment and financial stability, but also the president’s priorities.
That could inject dramatically more uncertainty and volatility into financial markets. Recent weeks offer a taste of the potential consequences. Stocks, bonds and the dollar all gyrated as Trump imposed and then partially walked back tariffs. And as tariffs drove up expectations of inflation, Trump called on the “slow-moving” Fed to cut rates.
Challenging a 1935 precedent
Fed governors are nominated by the president and confirmed by the Senate to 14-year terms, with one serving a concurrent four-year term as chair. The Federal Reserve Act says they can only be fired for cause. Scholars believe the Supreme Court entrenched that principle in 1935, when it barred Franklin Roosevelt from firing members of the Federal Trade Commission for purely political reasons because, unlike regular executive branch employees, they served a quasi-judicial role.
But in February, the Trump administration said the court should overturn that precedent, dubbed Humphrey’s Executor, for intruding on the president’s control over the executive branch. Trump then forced the matter by firing a Democratic member of the National Labor Relations Board and a Democratic member of the Merit Systems Protection Board.
Both sued, arguing the firings were illegal. Chief Justice John Roberts has let the firings stand while the court considers the dispute. He asked both sides to submit briefs by the end of Tuesday.
The justices might first rule only on whether the plaintiffs should get their jobs back, and settle the merits of the case later. The court’s conservative majority is known to look skeptically upon Humphrey’s Executor.
The Fed chair might have other ways to contest dismissal without the 1935 precedent. Some of Trump’s own officials appear wary of a fight. When the White House in February tightened oversight of independent agencies, it included the Fed’s bank regulation but exempted its monetary policy....
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