Trump Fed battle: why removing Jerome Powell and board governors faces steep legal barriers

Donald Trump wants Jerome Powell off the Federal Reserve board, but finding a lawful way to push him out remains an uphill battle.

A long-awaited report from the Fed’s inspector general found that poor management allowed the renovation of two historic headquarters buildings in Washington to run roughly $1 billion over budget. Yet the watchdog explicitly found no criminal conduct and no administrative wrongdoing by Powell or any other individual governor. The board, the report noted, routinely delegated construction management to staff.

That leaves the White House without the clear legal pretext it needs under the Federal Reserve Act, which protects governors from presidential dismissal except "for cause" — typically meaning severe neglect of duty or criminal malfeasance.

What the law requires to remove a Fed governor

Unlike cabinet secretaries, who serve at the pleasure of the president, Fed governors are appointed to staggered 14-year terms specifically to shield monetary policy from short-term political demands. Powell handed the chairmanship to Kevin Warsh but retains his seat as a governor until January 2028. In March, he made clear he intends to see that term out until any legal threats against him are resolved.

Trump told reporters that Powell was "a disaster" who "should not be sitting on the Federal Reserve Board", directing Attorney General Todd Blanche to review the watchdog findings. The US attorney’s office in Washington is also reviewing the document. But establishing the legal threshold for cause in court is a different matter entirely.

Scott Alvarez, a former general counsel for the Fed, pointed out that the renovation findings fall far short of justifying dismissal. The report details organisational disorganisation, such as failing to enforce a guaranteed maximum price, but acknowledges that tighter controls might not even have lowered the final bill. Courts are traditionally sceptical of treating administrative cost overruns as grounds to fire independent regulators.

Lisa Cook and Michael Barr face similar pressure

Powell is not the only target. The administration has also set its sights on governors Lisa Cook and Michael Barr.

In June, the Supreme Court halted an attempt to fire Cook over allegations regarding a past mortgage application, ruling that she was entitled to formal notice and a chance to respond. While the administration provided that notice in August, Cook is contesting the matter before US District Judge Jia Cobb, with the parties due to file a joint status report by 6 November. Crucially, the Supreme Court permitted Cook to remain in her post while the legal fight plays out.

Barr, the Fed’s vice chair for supervision, has faced White House criticism over the 2023 collapse of Silicon Valley Bank. Yet an independent review by Starling Advisory Group faulted broader supervisory systems rather than Barr personally.

Why legal action could backfire on the White House

If the administration proceeds with formal dismissal proceedings against any of the three, the cases will head straight to the federal courts. Precedent offers Trump little comfort.

A federal judge had already quashed subpoenas directed at Powell in a previous criminal inquiry, ruling their primary purpose was to harass him. Powell himself described the inquiries in January as mere pretexts.

Because governors can remain seated while litigation winds through the courts, aggressive legal manoeuvres could simply harden their resolve to stay. That would leave the board’s voting majority unchanged while embroiling the White House in protracted constitutional litigation.