A Supreme Court judgement that could impact the US Fed's independence

Can Trump fire US Federal Reserve Chairman, Jerome Powell? Trump's statement that Powell's "termination can't come fast enough" has fuelled fresh speculation about the possible fate of the Fed Chair.

There is a case before the US Supreme Court that could conceivably have some bearing on the Fed Chair's position, according to some legal experts. See this report in FT and this one from Bloomberg. Here is a brief summary of the issues.

In 1933, President Franklin Roosevelt fired William Humphrey, head of the Federal Trade Commission, for opposing New Deal policies. After he died, Humphrey's Executor pursued the case in order to recoup wages. The Supreme Court ruled that Roosevelt had fired Humprhey without "cause". That phrase has been interpreted to mean inefficiency, neglect or malfeasance.  Himphrey's Executor has come to be seen as a landmark ruling. 

If the US Fed Chair differs from the President on a matter of policy, say, cutting interest rates, can that qualify as inefficiency, neglect or malfeasance? Well, it doesn't sound like it does but a President might contend that the Chair is seriously hurting the economy through gross incompetence .... and then what happens? We are in uncharted waters.

That brings us to the case now before the US Supreme Court. In January, President Trump fired two ladies, the heads of two independent agencies, the National Labor Relations Board and the Merit Systems Protection Board. The two heads moved the courts that ordered their reinstatement. The US government went on appeal to the US Federal Court of Appeals which upheld the orders of the courts. The government then moved the Supreme Court. In early April, the SC Chief Justice John Roberts issued orders asking the two ladies not to attend office until the SC ruled in the case. A ruling is expected in the coming days.

There are some who argue that the law only talks about Governors of the Fed, it doesn't say anything about the Chairman. Some legal scholars argue that the President can remove Powell as Chairman but leave him on the board as Governor- a demotion of sorts!

There are others who say that the Fed cannot be compared with other independent agencies. A ruling that favours the Trump administration in the present case cannot,therefore, be used to remove the Fed Chair. There is some support for this view in a 7-2 ruling last year in favour of the head of the Consumer Protection Bureau.Even the dissenting judges said at the time that the Fed was a unique institution that would merit different treatment.

Fed Chair Jerome Powell himself has opined that any SC ruling relating to the case that involves the two lady heads of agencies would not apply to the Fed.

What if President Trump, nevertheless, removes Powell and the case goes to the Supreme Court? Remember that, in a recent case that involved the US government's illegal deportation of a citizen, the government has said it cannot do anything to bring back the citizen....