The Federal Reserve Board is currently facing potential shake-ups as President Donald Trump eyes the removal of certain members. While Trump cannot fire Federal Reserve Chair Jerome Powell, other board members are not safe from his scrutiny. Reports indicate that some members are already seeking legal counsel to protect their positions.
The Federal Reserve Board consists of seven members, each appointed by the President and confirmed by the Senate. With a number of Biden appointees currently in key roles, Trump may be considering a clean sweep of the board.
At the center of attention is Powell, who was appointed by Trump in 2017 and whose term as Chair extends until 2026. Powell cannot be removed unless there is evidence of gross misconduct, rather than mere policy disagreements. Despite Trump’s potential interest in removing Powell, his focus seems to be on other members first.
One such member is Michael Barr, the Vice Chair for Supervision, who oversees bank regulation. Barr, appointed by Biden, is facing scrutiny from Trump’s advisors. Barr’s role may not offer the same protections as Powell’s, leading him to seek legal advice in case of dismissal.
Adriana Kugler, another Biden appointee, is also on Trump’s radar. With her term ending in January 2026, Kugler’s reputation may not be enough to protect her position. Similarly, Biden appointees Philip Jefferson and Lisa Cook are at risk of losing their jobs.
On the other hand, Trump’s allies on the board, such as Christopher Waller and Michelle Bowman, are safe for now. Waller focuses on monetary policy, while Bowman is dedicated to community banking. Their positions are secure unless Trump decides otherwise.
Trump may attempt to exploit legal loopholes to remove board members. While federal law specifies that a Fed governor can only be removed “for cause,” the interpretation of “cause” is up for debate. Trump could potentially challenge this in court, although the outcome is uncertain.
Alternatively, Trump could opt for demotion, leaving Powell on the board but stripping him of the Chair position. This uncharted territory raises questions about the legality of such a move.
If court battles seem daunting, Trump could turn to Congress for support. With a Republican-majority, Congress has the power to amend the Federal Reserve Act and potentially weaken the Fed’s independence.
The potential shake-up at the Federal Reserve has already caused unease on Wall Street. Any interference with the Fed’s independence could have serious implications for global economies and financial markets. The fallout from such actions could mirror previous instances of market volatility under Trump’s administration.
As the situation unfolds, the importance of maintaining the Fed’s independence remains a critical issue. The decisions made by the board have a profound impact on the economy and financial stability, making it essential to uphold the integrity of the institution.