The White House reportedly explored the legality of demoting Fed chair Jerome Powell in February:
Citing people familiar with the matter, the report said the White House general counsel’s office weighed the legality of stripping Powell of his chairmanship of the central bank, and leaving him as just a Fed governor.Bloomberg said it didn’t know the result of the administration’s review.
The report comes just a day ahead of a Federal Open Market Committee decision, and pressure from the White House to reduce interest rates. Economists expect the Fed to wait until July, at the earliest, to reduce rates.Robert Hockett, a professor of law at Cornell Law School, told MarketWatch last fall that Trump could not fire Powell outright.Similar to other independent regulatory agencies, like the Securities and Exchange Commission, the Federal Reserve Act, section 10.
Some advocates of executive power believe requiring cause to fire independent agency heads is unconstitutional and would like to find a case to bring the issue before the Supreme Court. Stocks retreated from highs after the report. The S&P 500 index SPX, +0.97% still closed up nearly 30 points to 2,917 on hopes the Fed will soon cut interest rates.
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