Trump seizes on Fed renovations as potential Powell ouster

President Trump has seized on the Federal Reserve's multibillion-dollar makeover as a possible avenue for finally ousting its politically independent chair, Jerome Powell.

Trump has for months criticized Powell over the Fed's refusal to cut interest rates, a decision partially rooted in uncertainty surrounding the president's tariffs. Trump has expressed his desire to remove Powell, whom he appointed during his first term, but the legality in which he could do so remains a key question.

With the Supreme Court signaling Trump would need a valid reason, the president has held back from terminating the central banker even as he doesn't hesitate to eviscerate other agencies' independence.

But Trump might now see his opening at the Fed.

Some $2.5 billion in renovations to the central bank's headquarters in Washington have put Powell in the hot seat over management of the project, which has cost about $600 million more than initially expected. Asked Tuesday if the pricey updates are a fireable offense, Trump said, "I think it sort of is."

Legal scholars say removing Powell over the renovations would be an uphill battle of its own. Powell could claim Trump didn't have "cause" to terminate him, as required by federal law.

"If Trump removes Powell, and Powell does push back, I think he would say that this is a blatantly illegal and abusive use of the president's power," said Todd Phillips, a law professor at Georgia State University.

Unlike some other independent agencies' governing statutes, which expressly list out fireable offenses, like inefficiency, neglect of duty and malfeasance in office, the Federal Reserve Act does not. It merely states the president must have "cause."

"It can't just be that the president doesn't like the tie that Jay Powell is wearing on a certain day," Phillips said.

Still, Trump would be the first president in modern history to fire the Fed chair, making any theory untested.

"Can the president fire Jerome Powell? I'm really not sure," Speaker Mike Johnson (R-La.), a former constitutional lawyer, told reporters in the Capitol.

Though Trump could cite the renovations, he might have trouble proving the board's oversight ran afoul of the law. The Federal Reserve Act provides that the Fed's board may "maintain, enlarge, or remodel any building or buildings so acquired or constructed" and retains "sole control" of those buildings.

As Trump muses about the possibility of firing Powell, administration officials are stepping up investigations into the renovations, laying the groundwork for it to potentially become a valid rationale.

Russell Vought, director of the Office of Management and Budget, wrote in a letter to Powell last week that Trump is "extremely troubled" by the Fed chair's management, suggesting apparent changes to the overhaul don't match up with his testimony to Congress. Vought also suggested Powell failed to properly consult with the National Capital Planning Commission (NCPC), which reviews certain building projects in Washington, D.C.

Trump recently installed three of his White House officials at the commission.

White House staff secretary Will Scharf, most well-known for handing Trump executive orders to sign in the Oval Office, now serves as chair. He works alongside White House Deputy Chief of Staff Michael Blair and Stuart Levenbach, who works in Vought's office.

"We should not be made fools of by those that come ahead of us," Blair said at a commission meeting this month as he criticized the renovation project, demanding more information from Fed leaders.

Powell pushed back on the criticism in a Thursday letter, saying the Fed has "taken great care."

"We take seriously the responsibility to be good stewards of public resources as we fulfill the duties given to us by Congress on behalf of the American people," Powell wrote.

Phillips, the Georgia State law professor, said the renovations would be a "pretextual reason" for firing Powell, given that the costs of the project have long been public and Trump is only now raising them as a concern.

Paul Schiff Berman, a law professor at George Washington University, also stressed there's no allegation Powell is enriching himself, and the renovations aren't part of his core role setting monetary policy.

"I think there would be strong arguments even if Trump tried to fire Powell for cause that the rationale being given is neither sufficient to show malfeasance and that it's probably pretextual, because it's clear that he has long wanted to fire Powell regardless, for political reasons," said Berman.

Citing the renovations would break with how Trump has treated other independent agencies, where he has moved without hesitation to terminate officials with no rationale, even those with removal protections.

Lawsuits are now pending over Trump's firings at the National Labor Relations Board, Merit Systems Protection Board, Federal Labor Relations Authority, Privacy and Civil Liberties Oversight Board, Equal Employment Opportunity Commission, National Credit Union Administration, Consumer Protect Safety Commission, National Transportation Safety Board and Federal Trade Commission (FTC).

Many of the fired commissioners have succeeded in the lower courts, most recently on Thursday, when a district judge ordered the reinstatement of FTC Commissioner Rebecca Slaughter.

However, the Trump administration believes the real fight is at the Supreme Court, the only court with authority to overrule its 90-year-old precedent permitting removal protections for some agencies. The administration has latched onto signals from several conservative justices that they may further limit the precedent or outright disavow it.

But even those sympathetic justices indicate the Federal Reserve may be the rare exception where the president can't fire the chair on a whim.

"The Federal Reserve is a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States," the court cautioned in an unsigned May ruling as it greenlit Trump's firings at two independent labor agencies.

Berman said he believes Powell could mount a successful legal challenge if Trump doesn't purport to have cause.

"It was, I think, a signal that even if the Supreme Court gets rid of the independence of many other agency heads, they're not inclined to get rid of the for-cause removal protection that protects the Fed chair," said Berman.

Many Republican lawmakers have called for Powell to resign or for Trump to pull the trigger on firing him. But at least one Republican, Sen. Thom Tillis (R-N.C.), has urged the president to keep Powell in the job, warning it would disrupt financial markets and threaten long-term economic growth.

"While dramatic fluctuations may not make the wealthy lose sleep at night, they can seriously harm those working-class Americans I grew up with who are already struggling to get by," Tillis wrote on X.

"I have been not happy with the leadership there, personally," he continued. "But I'm honestly not sure whether that executive authority exists. I'd have to look at that."