The Court Has an Easy Answer on the Fed

"In its sweeping Trump v. Wilcox decision in May, the Court ruled that the president "may remove without cause" officials in administrative agencies-a decision grounded in the Court's ringing endorsement of the so-called unitary executive. An elementary application of the unitary-executive theory would allow the White House to interfere, unchecked, with the Fed-just as the Court has empowered Trump to gut every other federal agency."

"Evidently, though, the Court recognizes the potential catastrophe that awaits should Trump exercise absolute authority over the Fed: The Wilcox ruling carved out a singular exception for the Federal Reserve System, on the grounds that the Fed is "a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States.""

"Unfortunately, the Court's statement-vague on this history-is both misleading and not legally binding. The First and Second Banks were largely private institutions, beholden to their stockholders, with certain important public functions. The Fed, by contrast, is an independent government entity that supervises and regulates the practices and solvency of private commercial banks. On the face of it, these institutions bear little genetic similarity. Moreover, the Court's statement amounts to dicta-comments made in passing, addressing altogether different parties and facts than the case at issue."

Since the Wilcox decision, the Court affirmed that the president may remove administrative-agency officials without cause under a unitary-executive theory. The Court carved a purported exception for the Federal Reserve, describing it as a uniquely structured, quasi-private entity tied to the First and Second Banks. Historical evidence undermines that characterization: the early national banks were largely private and beholden to stockholders, whereas the Fed is an independent government regulator overseeing commercial-bank practices and solvency. The Court’s statement appears to be dicta and not legally binding, leaving Fed independence legally vulnerable and raising serious economic risks.

Read at The Atlantic