"New Federal Reserve News Agency": If Trump wants to fire Powell, Powell will resort to legal action
Powell, who has a background in law, previously stated that under U.S. law, the president does not have the authority to fire or demote the Chair of the Federal Reserve. Six years ago, when Trump considered firing Powell, there was a brewing legal lawsuit within the Federal Reserve against the president
On Thursday, November 7, Republican Senator Mike Lee posted on social media platform X, stating that the Federal Reserve, as an executive branch, should act under the guidance of the President. The next day, Musk retweeted this post with a "100" emoji to express his agreement.
During this election cycle, Trump has repeatedly stated that if he returns to the White House, he wants to have a say in the Federal Reserve's policy decisions. During his first term, Trump even considered firing Powell, whom he had appointed as the Federal Reserve Chairman, due to disagreements over interest rates.
However, Nick Timiraos, a senior reporter for the "New Federal Reserve News" and The Wall Street Journal, believes that if Trump attempts to fire Powell again, Powell is prepared to fight back legally.
In an article last weekend, Timiraos pointed out that in 2018, Trump requested Powell to lower interest rates but was refused, leading him to attempt to remove Powell from the chairmanship. In response, the Federal Reserve secretly developed an emergency strategy: a legal lawsuit against the President to protect the integrity of the U.S. central bank.
Powell's willingness to refuse Trump stems from the considerable independence the Federal Reserve has within the U.S. legal system. The terms of the Chairman and Board members are fixed and legally protected, and they can only be removed for sufficient cause (such as misconduct or neglect of duty). This means that Powell's position cannot be arbitrarily terminated by the President.
The article cites informed sources stating that Powell told then-Treasury Secretary Steven Mnuchin that if the President attempted to remove him, he would fight back. This is not only crucial for Powell personally but also for the future independence of the Federal Reserve.
Moreover, let's not forget that Powell is a lawyer by training.
Powell holds a Juris Doctor degree from Georgetown University and was a lawyer for a long time before becoming the Federal Reserve Chairman.
Now, with Trump returning to the White House, the tension between him and Powell is set to play out once again.
At last week's monetary policy press conference, when Powell was asked if he would resign, he responded with four "no" answers. Powell stated that the President does not have the authority to fire him because "the law does not allow it."
Does this statement mean that the emergency response strategy from six years ago will be brought back to the table?
Timiraos believes that Powell's legal challenge may require him to pay out of pocket, as it is currently unclear whether the Federal Reserve has the authority to challenge his removal. However, this challenge is crucial for maintaining the independence of the Federal Reserve. Former Federal Reserve General Counsel Scott Alvarez stated that if Trump successfully removes Powell from office, future Federal Reserve Chairmen may face the risk of being fired by the President at any time, setting a precedent