The US Supreme Court protected the Federal Reserve from Donald Trump’s attempt from dismissing senior independent federal agencies in a decision that will probably calm concerns that the president could move to dismiss Jerome Powell. The court, on Thursday, stated that the Fed is a “quas-private entity, structured in a unique way.” However, the judges allowed Trump to dismiss the member of the National Labor Relations Council, Gwynne Wilcox, and member of the Merit Protection Council, Cathy Harris, while they continue their legal challenges.
Regarding Powell, the decision provides a measure of clarity on the security of his position after a period of uncertainty. Last month, Trump sent conflicting signs, posting on April 17 that “Powell’s resignation cannot arrive fast enough!” Before telling reporters on April 22 that he had “no intention to fire him.”
The decision on Wilcox and Harris, both democrats, extends a temporary order that the head of justice, John Roberts, issued on April 9, allowing his immediate removal. Wilcox and Harris argued that allowing Trump to remove them to leave Powell vulnerable, along with the independence of the Fed. The court stated in its unlavose order that it disagreed with Wilcox and Harris’s allegation that “the arguments in this case necessarily imply the constitutionality of removal protections for just cause for members of the Federal Reserve Board or other members of the federal market committee”.
The court said it was not making a final decision in the case of Wilcox and Harris, given that the disputes are still in an early stage. But most said that the president “can remove without just cause” officers who exercise executive power, subject to restricted exceptions. The case is testing a decision of the 1935 Supreme Court, known as Humphrey’s executor, which allowed Congress to protect high employees from being fired, paving the way for independent agencies that now proliferate throughout the US government.
Three liberal judges disagreed with the decision that allowed layoffs. Writing on behalf of the group, Judge Elena Kagan said she was satisfied that the Fed was protected. “I am happy to hear this and I do not doubt the intention of the majority to avoid putting the Fed at risk,” said Kagan. But she added: “If the idea is to reassure markets, a simpler – and more judicial approach – it would have been to deny the president’s request to suspend the continuous authority of Humphrey’s.”
The Trump administration argues that the Constitution gives the president the right to freely remove officers who exercise a substantial executive branch. Administration sought to stop decisions of lower courts that claimed that Trump could not fire Wilcox and Harris.
Continues after advertising
© 2025 Bloomberg L.P.
