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Will President Trump fire (or request and accept the resignation of) Jerome Powell, Chairman of the Federal Reserve?
The Federal Reserve System (also known as the Fed) is the central banking system of the United States of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a series of financial panics (particularly the panic of 1907) led to the desire for central control of the monetary system in order to alleviate financial crises. Over the years, events such as the Great Depression in the 1930s and the Great Recession during the 2000s have led to the expansion of the roles and responsibilities of the Federal Reserve System.
The Chair of the Board of Governors of the Federal Reserve System is the head of the Federal Reserve. The chair is chosen by the President of the United States from among the members of the Board of Governors; and serves for four-year-terms after appointment. A chair may be appointed for several consecutive terms. William Martin was the longest serving chair, holding the position from 1951 to 1970.
As stipulated by the Banking Act of 1935, the President of the United States appoints the seven members of the Board of Governors; they must then be confirmed by the Senate and serve fourteen year terms.
The nominees for chair and vice-chair may be chosen by the President from among the sitting Governors for four-year terms; these appointments are also subject to Senate confirmation. The Senate Committee responsible for vetting a Federal Reserve Chair nominee is the Senate Committee on Banking.
Jerome Hayden "Jay" Powell is the 16th and current Chair of the Federal Reserve, serving in that office since February 2018. He was nominated to the Fed Chair position by President Donald Trump, and confirmed by the United States Senate.
Since Powell took the position of Fed Chair, the performance of major US equity indicies has been disappointing. President Trump has indicated that he is unhappy with the Fed's decision to raise interest rates several times this year. This has raised questions over whether Trump will try to replace Powell with a more accomodative Fed Chair.
According to Bloomberg, "any attempt by Trump to push out Powell would have potentially devastating ripple effects across financial markets, undermining investors’ confidence in the central bank’s ability to shepherd the economy without political interference. It would come as markets have plummeted in recent weeks, with the major stock indexes already down sharply for the year."
Section 10.2 of the Federal Reserve Act provides that upon the expiration of the term of any appointive member of the Federal Reserve Board in office on the date of enactment of the Banking Act of 1935, the President shall fix the term of the successor to such member at not to exceed fourteen years, as designated by the President at the time of nomination, but in such manner as to provide for the expiration of the term of not more than one member in any two-year period, and thereafter 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.
So far, no Fed Chairman has been removed by a President.
Humphrey's Executor v. United States, 295 U.S. 602 (1935) outlines the President's authority to remove appointed officials. Given that there is no precedent for a President attempting to fire a Fed Chairman, it is not entirely clear whether the President has the absolute authority to do so. In Humphrey's Executor, the Supreme Court distinguished between executive officers and quasi-legislative or quasi-judicial officers. The latter may be removed only with procedures consistent with statutory conditions enacted by Congress; the former serve at the pleasure of the President and may be removed at his discretion. The legal question on Presidential authority hinges on which of these positions the Federal Reserve Chairman is found to occupy.
This question asks: Will President Trump fire Jerome Powell, or ask him to resign, with Powell acceding to that request?
This question resolves positively if credible media reports in the U.S. financial press state that Jerome Powell has left the position of Chairman of the Board of Governors of the Federal Reserve System, and that he was either fired or asked by Trump or the Trump Administration to resign from the office.
It resolves negatively if Powell leaves of his own accord (e.g. to retire or pursue other opportunities, or in protest against Trump Administration policy or Trump himself), or if he leaves for reasons other than those outlined above (e.g. death, disability, incapacity, et cetera), or if his term of office expires and he is not appointed to a new term, does not seek a new term, or refuses to accept a new term.
The question also resolves negatively if Jerome Powell is still Fed Chairman when Donald Trump ceases to be President of the United States.
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