White House Adviser Suggests Trump May Remove Powell Over Fed Renovation Costs

White House economic adviser Hassett has criticized the Federal Reserve for cost overruns in its renovation, suggesting that if there is a valid reason, President Trump has the authority to dismiss Federal Reserve Chairman Jerome Powell. This statement comes at a time when there is growing speculation that Trump may seek to replace Powell before his term ends in 2022.

Legal expert John Haslet, a professor of law at the University of Maryland, argues that the Federal Reserve Act grants the president the power to remove the Fed chair for cause. This cause includes neglect of duty, malfeasance, or failure to perform the duties of the office. The speculation surrounding Powell's potential removal has been fueled by Trump's repeated criticism of the Fed's monetary policy, accusing Powell of raising interest rates too quickly, which he believes has hindered economic growth. However, Powell has maintained that the Fed's actions are data-dependent and aimed at achieving maximum employment and stable prices.

Haslet's analysis suggests that Trump's authority to remove Powell is not without limitations. The term "cause" is not explicitly defined in the Federal Reserve Act, leaving room for interpretation. Haslet believes that Trump would need to provide a clear and compelling reason for Powell's removal, and that any such action would likely face legal challenges. The potential removal of Powell has raised concerns about the independence of the Federal Reserve. Critics argue that removing Powell could set a dangerous precedent, undermining the Fed's ability to make decisions based on economic data rather than political pressure. However, supporters of Trump's potential action argue that the president has the right to appoint officials who align with his economic agenda.

The situation remains uncertain, with no clear indication of whether Trump will ultimately seek to remove Powell. Haslet's analysis provides a legal framework for understanding the president's authority in this matter. As the debate continues, it is clear that the independence of the Federal Reserve and the role of the president in monetary policy will remain contentious issues.