The Supreme Court Would Likely Let Trump Fire Jay Powell: Bloomberg Intelligence

Our Thesis: The Federal Reserve Act requires cause for the president to oust Fed Board members, yet there's a good chance the "for cause" removal restriction will be held unconstitutional for intruding on Trump's authority. Pending cases by fired agency heads are on a path to the Supreme Court, which should clarify the issue. Bloomberg Intelligence's Elliot Stein reports.

A DC Circuit Court order on April 7 by all the tribunal's active judges would effectively bar Trump's firing of NLRB and MSPB members without cause, a reversal of a March 28 ruling by three judges. Seven of the 11 judges on the court -- all appointed by Democrats -- found Trump wasn't likely to succeed on the merits. Those seven interpreted Humphrey's Executor -- the 1935 Supreme Court precedent cited to defend "for cause" removal restrictions -- as a broad exception to the president's removal authority, applying to multimember adjudicatory bodies. The Supreme Court administratively stayed the order and we think most or all of the six justices appointed by Republicans will read the exception more narrowly, as the dissent did in the circuit court order April 7. We also expect FTC firing cases to end in Trump's favor

Fed arguably also doesn't satisfy Humphrey's exception.

The DC Circuit's March 28 and April 7 orders don't bode well for the tenure protection of Federal Reserve Board members. As judges appointed by Republicans found with respect to the NLRB and MSPB, the FRB arguably also doesn't fit the Humphrey's Executor exception, given its power to conduct rulemaking and bring enforcement actions. If FRB members are fired without cause, they might argue the Fed's unique historical status and structure -- 14-year staggered terms -- impinges less on presidential authority, but that might not overcome SCOTUS' expansive view of presidential power. The DOJ has denied that its stance in the NLRB and MSPB cases would extend to FRB members, but the dissent in the March 28 order cited Trump's Feb. 18 executive order as claiming unlimited power to remove FRB members for any or no reason.

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