How Close Have We Come to a Fired Fed Chair?

Can the President of the United States fire the Chairman of the Federal Reserve?

Short answer: no. Not easily. Not without a fight.

The Federal Reserve Act gives the Chair of the Fed a four-year term. It also sets one key protection: the Chair can only be removed "for cause." That means misconduct, not just disagreement over interest rates.

"Cause" isn't defined precisely. But legal precedent matters. And the courts have made it clear - policy disputes aren't enough.

The Supreme Court's 1935 decision in Humphrey's Executor still carries weight. It ruled that independent agencies like the Fed must be free from direct political control. That includes protection from arbitrary removal.

No Fed Chair has ever been fired. No serious legal effort has come close.

In 1965, President Lyndon B. Johnson floated the idea. He didn't like the direction the Fed was heading. He asked whether he could remove Board members who didn't align with his economic plans. The Justice Department told him no.

In the 1980s, Paul Volcker faced political backlash over high interest rates. Representative Henry Gonzalez even introduced articles of impeachment. They died quietly. No momentum. Just noise.

Earlier still, in 1917 and 1933, populist members of Congress filed impeachment motions against multiple Fed governors. Those went nowhere too. Procedural dead ends.

The Chair of the Fed has been protected not just by law, but by precedent. Congress may complain. Presidents may grumble. But no one's ever pulled the trigger.

Donald Trump came closest. Publicly, repeatedly, he threatened to fire Jerome Powell. He called Powell's leadership "terrible." Floated replacements. Criticized rate hikes.

Still, Powell stayed. And said he would continue to do so. In interviews, he emphasized the Fed's independence. Courts have backed that position.

Markets didn't like the threats. Stocks dipped. Bond yields jumped. Traders started pricing in uncertainty - not just about rates, but about the system itself.

Legal scholars weighed in. Most agreed: firing Powell would trigger a major constitutional showdown. The courts would almost certainly intervene. And a president would almost certainly lose.

In 2025, the question remains hypothetical. Powell is still in place. The Fed continues to operate independently. But the political tension hasn't gone away.

Presidents want control. But the Fed Chair doesn't serve at their pleasure.

That tension is by design.

Filed under: General Knowledge