Can you say goodbye to Fed members?
The Federal Reserve Law of 1913, which created the Central Bank, says that the members of the Board of Governors, including the Chief of the Fed, can be “dismissed due to the president.” But the law does not define “cause” or establish any rule or procedure of dismissal.
No president has ever dismissed a member of the Fed Council and the law has never been tested in court.
“Cause” can mean anything?
Several federal laws that protect members of other agencies to be dismissed by the president without just cause say that the “cause” may include negligence in the fulfillment of duty, misconduct and inefficiency.
If Powell is fired and demanded, those laws could be a guide for the courts to determine if Trump had a cause to dismiss it.
By promulgating those protections, Congress intended to distance the White House agencies. They also intend to isolate their members of the policy when they issue failures in individual cases and develop policies with long -range impacts, such as the monetary policy established by the Fed.
And if Trump lacks cause, Powell wins?
It may not. In several cases that challenge Trump’s dismissal from agency officials, his administration has argued that giving them any protection against removal violates their broad constitutional powers to control the Executive Power.
The administration could allege in a similar way that demanding a cause to dismiss a member of the Board of the Fed is unconstitutional, which would allow Trump to fire Powell for any reason or by any.
And if Powell sue and win, the Trump administration could argue that the courts lack power to restore it. Government lawyers have said in some cases pending that dismissed officials would have a maximum right to backward wages and a declaration of the court that their dismissal was illegal.
What has happened in recent cases?
Several federal judges have ruled that Trump’s layoffs of members of independent agencies were illegal and ordered the reinstatement of officials. The Courts of Appeal or the United States Supreme Court have suspended those sentences waiting for appeals.
An Appeals court based in Washington DC is expected to pronounce soon about whether Trump had power to dismiss Democratic members of two labor boards, which could lead to a review by the Supreme Court.
