Can Trump Fire Fed Chair Jerome Powell? What History Tells Us

June 19, 2019, 6:32 PM UTC

President Donald Trump has publicly attacked Federal Reserve Chairman Jerome Powell for months as the central bank continues to increase interest rates and pull back from pouring money into the economy by reducing its balance sheet. Trump is at odds with the chairman as he seeks to run his 2020 campaign on a platform of economic prosperity.

In numerous tweets, interviews, and other public remarks, the Trump suggested his handpicked Fed chairman was a problem, calling the bank’s actions “unnecessary and destructive” to the U.S. economy.

Trump’s longtime attacks on the U.S. central bank culminated on Tuesday when he again suggested he would consider firing Chairman Powell, as Fed leaders met in D.C. to determine whether to keep interest rates the same or reduce them. Trump has threatened to fire the chairman several times since late last year.

While there’s not much the president can do to about the Fed, Trump’s White House is still looking into options.

Can Trump fire Chairman Powell?

The law is not totally clear, but American presidents don’t have the explicit legal power to fire a Fed chairman. As an independent agency, the bank does not answer to the White House, but to Congress.

However, Trump has continuously pushed the boundaries of his presidential powers, and has faced a number of legal challenges as a result. The president bypassed Congress when he decided to declare a national emergency and use military funds to build a wall along the U.S.-Mexico border. Trump also fired FBI director James Comey in an attempt to halt the investigation into his 2016 campaign’s alleged collusion with Russia.

Still, White House lawyers looked into the president’s options for removing Chairman Powell as early as February of this year. While Trump’s top economic advisers told him removal of the Fed chair is not legally possible, his lawyers have reportedly provided him with a legal outline to demote Powell and strip him of his powers.

Section 10 of the Federal Reserve Act states that “each member shall hold office for a term of fourteen years from the expiration of the term of his predecessor, unless sooner removed for cause by the President.” The Act doesn’t define what would constitute cause for removal, though it has generally referred to performance issues, not a difference in policy preferences.

Has a U.S. president ever tried to fire a Fed chair?

Recent U.S. presidents have generally remained silent on matters related to Fed policy. No president has attempted to fire a Fed chair before, though President Lyndon B. Johnson—who wanted to keep interest rates low—is said to have assaulted then-Fed Chairman William McChesney Martin in 1965. According to Martin, Johnson said to him, “Boys are dying in Vietnam, and Bill Martin doesn’t care.”

Johnson later asked the Department of Justice whether he could remove a Fed board governor, but was reportedly told that a disagreement over policies was not appropriate grounds for removal.

The Fed isn’t backing down

While Trump has launched his attacks on the chair, Powell has not backed down. In a March interview with 60 Minutes, Powell said that he intends to serve his full term. “The law is clear,” he said at the time.

Top Democrats including Senate Minority Leader Chuck Schumer warned the Trump administration against involving itself in matters of the Federal Reserve.

Though Congress would likely oppose the president’s attempts to remove Powell, it also has consistently failed to impose limitations on his power. The Democratic Party has been at odds with itself in recent months over whether or not to bring impeachment proceedings against the president following the release of former Special Counsel Robert Mueller’s Russia report.

Powell is scheduled to hold a news conference Wednesday at 2:30 p.m. ET to announce whether or not the agency will leave interest rates alone.

More must-read stories from Fortune:

—2020 Democratic primary debates: Everything you need to know

—The campaign finance power behind Trump impeachment efforts

—Not every state is restricting abortion rights—some are expanding them

Richard Nixon‘s “Western White House” is back on the market—at a discount

—Trump administration to use former Japanese internment camp to house migrant children

Get up to speed on your morning commute with Fortune’s CEO Daily newsletter.

Subscribe to Well Adjusted, our newsletter full of simple strategies to work smarter and live better, from the Fortune Well team. Sign up today.

Read More

Great ResignationDiversity and InclusionCompensationCEO DailyCFO DailyModern Board