Supreme Court’s Trump Attack Enabled Powell Fed Challenge
On Sunday evening, Federal Reserve Chair Jerome Powell revealed that the Trump administration has opened a criminal investigation into him, nominally because of a dispute over a renovation of the Fed’s headquarters. The real reason for the investigation is almost certainly that president Donald Trump wants to push Powell out of office and make room for someone more aligned with Trump’s agenda.
Trump initially appointed Powell to lead the Fed in 2018, but the president later soured on Powell, because Trump wants the Fed to lower interest rates more quickly than it has.
By law, the Federal Reserve is insulated from presidential control, and members of the Fed’s Board of Governors may only be removed by the president “for cause.” This is as the Fed has the power to temporarily stimulate the economy,perhaps boosting a president’s approval rating during an election year,but at the cost of much greater economic turmoil down the road.
In advance of the 1972 election, such as, President Richard Nixon successfully pressured Fed Chair Arthur Burns to lower interest rates in order to juice up the economy. It worked, at least in the short term, and Nixon won that election in an historic landslide. But burns’s decision to play along with Nixon is often blamed for the years of “stagflation,” slow economic growth and high inflation, which followed.As University of Michigan economist Justin Wolfers told the BBC Sunday night, pressuring a central bank to lower interest rates without justification is “a thing that tin pot dictators do right before starting a hyperinflation and destroying their own economies.” wolfers listed several other countries where political leaders applied similar pressure to central bank leaders, including Venezuela, Russia, and Zimbabwe.
Six of the Supreme Court’s Republicans are enthusiastic supporters of a unitary executive, they indicated in Trump v. Wilcox (2025) that the Fed is special,and its leaders should not be subject to presidential pressure.
Admittedly, their explanation for why the Fed is special is only one sentence long – “The Federal Reserve is a uniquely structured, quasi-private entity that follows in the distinct past tradition of the First and Second Banks of the United States” – and that sentence is gibberish. But Wilcox should prevent Trump from firing Powell for the simple reason that it is a decision of the Supreme Court. And Supreme Court decisions are binding even if their reasoning is about as coherent as a teenager yelling “six-seven.”
Rather than accept the Wilcox decision, however, Trump appears to have responded to it by bringing fake allegations against members of the Fed that he wants to remove.Next week, actually, the Supreme Court plans to hear Trump v. Cook, a case about Trump’s attempt to fire Fed governor Lisa Cook after accusing her of committing mortgage fraud. according to Reuters, Cook’s mortgage documents appear to debunk Trump’s allegations against her.
The criminal investigation into Powell seems to be a similar effort to gin up dubious charges against a Federal Reserve leader, which then can be used to justify removing Powell “for cause.”
This wouldn’t be happening without SCOTUS
Trump can bring thes shady investigations against his perceived political enemies as the Republican justices explicitly gave him the power to do so in its Trump immunity decision. Recall that the unitary executive theory holds that the president has certain powers that cannot be touched by Congress or the courts. According to Chief Justice John Roberts’s majority op