There are new developments this week in the longstanding tensions between the White House and the Federal Reserve, which have reignited speculation about President Trump potentially firing Fed Chair Jerome Powell before his term ends in May 2026.

On July 10, Office of Management and Budget (OMB) chief Russell Vought fired off a letter blasting Powell for approving a $2.5 billion, “Palace-of-Versailles”-style renovation of Fed headquarters that is about $700 million over budget and costs “many orders of magnitude” more than comparable projects, allegedly funded “on the taxpayer’s dime.” (The Fed finances the work from interest income and bank-servicing fees, not congressional appropriations, but every dollar spent reduces the surplus it normally remits to the Treasury.) Vought told CNBC the overrun shows “fundamental mismanagement of the Fed under the chairman.” Two days later, National Economic Council Director Kevin Hassett said on ABC’s This Week that whether Trump can fire Powell “is being looked into,” adding that, “if there’s cause, he does” have that power.

The Fed plays a crucial role in our economy. It steers interest rates, mortgage costs, inflation, and job markets. If presidents can remove Fed leaders for political reasons, it could convert the central bank into a tool of campaign cycles—triggering financial instability.

Powell’s term expires relatively soon, so Trump is still not expected to actually go through with firing him and bear the economic and legal fallout risks it carries. But the legal question about the president’s right to fire a Fed chair remains alive because of the Supreme Court’s pending Trump v. Wilcox case, which could reshape the “for cause” protections that currently insulate the Fed and other independent boards from the White House and shifting political winds.

The following Brief outlines the evolving legal doctrine on this topic.

What does the law actually say about firing a Fed chair?

• Section 242 of the Federal Reserve Act creates a seven‑member Board of Governors, each appointed by the President and confirmed by the Senate to a 14‑year term. Any governor—including the Chair—can be removed only “for cause,” a statutory standard generally interpreted as fraud, serious neglect, willful non-performance or other serious legal violations, not disagreements over interest‑rate policy.
• In Fed parlance, a “governor” is one of these seven national policymakers (distinct from the 12 regional Reserve Bank presidents) who collectively run the Board, draft regulations, and—together with five rotating Reserve Bank presidents—set monetary policy through the Federal Open Market Committee.

What gives the President removal power and where does it stop?

• Myers v. United States (1926): The Supreme Court established the baseline rule in a 6-3 decision that the President may remove purely executive officers at will, and Congress can’t put strings on that power.
  • Chief Justice Taft wrote: “[A]s a constitutional principle, the power of appointment carried with it the power of removal … The reason for the principle is that those in charge of and responsible for administering functions of government who select their executive subordinates need, in meeting their responsibility, to have the power to remove those whom they appoint.”
• Humphrey’s Executor (1935): Nine years later, the Court, in a unanimous decision, carved a major exception to the rule in Myers: When Congress creates a multi-member board performing “quasi-legislative and quasi-judicial” functions, it may “forbid their removal except for cause.”
  • The Rationale: Independence is needed for bodies that make rules and adjudicate cases; their blend of powers is not purely “executive,” so the full Myers logic does not apply.
• Free Enterprise Fund (2010): In a 5-4 decision, the Court struck down the Public Company Accounting Oversight Board’s “double‑insulation” system, whereby Board members were removable only for cause by SEC Commissioners, who themselves could be removed only for cause by the President. The Court reasoned that the two layers of tenure protection break the chain of political accountability and thus violate Article II’s separation of powers requirement.
  • Justice Roberts wrote for the majority: “The President cannot ‘take Care that the Laws be faithfully executed’ if he cannot oversee the faithfulness of the officers who execute them.”
• Seila Law (2020): In a 5-4 ruling, the Court struck down the Consumer Financial Protection Bureau’s single‑director structure, which allowed the Director to be fired only “for cause.” The Court said “the CFPB’s structure has no foothold in history or tradition” and concentrates “significant governmental power in the hands of a single individual who is neither elected … nor meaningfully controlled … by someone who is.” The majority distinguished Humphrey’s Executor, which concerned a bipartisan, staggered‑term commission, from this “new situation.”
  • Justice Roberts wrote for the majority: “The Constitution requires that such officials remain dependent on the President, who in turn is accountable to the people.”
• Collins v. Yellen (2021): In a 7-2 decision, the Court again invalidated a single‑director, “for‑cause” shield (this time at the Federal Housing Finance Agency) as violating separation of powers. However, the Court added an important caveat on remedies: Past agency actions are void only if the challengers prove that the unconstitutional tenure limit “inflicted compensable harm.”

Will Trump v. Wilcox overturn the rule protecting independent boards?

• Why this case matters: It is widely seen as the government’s test case for the Supreme Court to reconsider Humphrey’s Executor, the precedent that shields multi‑member independent boards from at-will firing by the President. If the Court takes that invitation, the legal framework protecting agencies from the Fed to the FTC could be rewritten.
• What has happened thus far: Trump summarily fired National Labor Relations Board member Gwynne Wilcox and Merit Systems Protection Board member Cathy Harris without providing a statutory “cause.”
• The district court and the D.C. Circuit ordered their reinstatement, but on May  22, 2025, the Supreme Court, by a 6‑3 vote, stayed those orders, leaving the firings in place while it decides whether to grant full review.
• The majority observed that both boards “exercise considerable executive power,” language that tracks the Court’s rationale for invalidating single‑director tenure shields in Seila and Collins.
• In dissent, Justice Kagan wrote that the stay “invites an assault on Humphrey’s Executor,” warning of ripple effects across the independent‑agency landscape. However, there may be a possible carve‑out for the Fed. The majority remarked that “the Federal Reserve is a uniquely structured, quasi‑private entity that follows in the distinct historical tradition of the First and Second Banks of the United States.” In other words, even if Humphrey’s is narrowed or overruled, the Fed might still be treated differently.