Donald Trump indicated he might fire Jerome Powell over the Fed's refusal to cut interest rates, which led to market fluctuations. Trump's administration is laying groundwork for Powell's eventual removal, despite legal restrictions against removing Fed chair for policy disagreements. Federal law allows removal of Fed members only for cause, a precedent upheld by the Supreme Court nearly ninety years ago. The current administration disputes this precedent, having already dismissed several agency heads protected under federal law.
Dahlia Lithwick: This is a political story and also a markets story. But it's also a galactic game of chicken being played out between the Roberts court and the White House.
Mark Joseph Stern: Under federal law, Trump cannot remove Powell over a policy disagreement. Federal law expressly allows for the removal of the Fed's board members only for "cause".
Ninety years ago, in a case called Humphrey's Executor, the Supreme Court unanimously upheld this kind of protection against removal.
The current administration rejects the validity of that precedent and has already fired a bunch of agency heads who are also protected from removal under federal law.
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