U.S. Supreme Court allows Trump to fire independent board members, but not at Fed

“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 SC justices added. File
| Photo Credit: Reuters

The U.S. Supreme Court on Thursday (May 22, 2025) allowed President Donald Trump to fire leaders of two independent agencies but signalled that such dismissals would not be permitted for the Federal Reserve.

The 6-3 decision puts on hold a lower court’s order that the two leaders be reinstated and marks a major win for Mr. Trump in his bid to greatly expand presidential power over historically independent government agencies.

The case has been closely watched over what it could entail for the Fed, another independent agency whose rate-setting committee holds immense power in the world’s biggest economy and whose chairman Mr. Trump has fiercely criticised.

A decision permitting Mr. Trump to fire Federal Reserve board members could send shock waves rippling through the global economy, with the U.S. Central bank’s independence thrown into question.

But the court’s six-member conservative majority appeared to carve out a special exemption for the central bank.

The two agency heads who had sued Mr. Trump, alleging that their firings were illegal, had claimed that any decision to the contrary would also implicate the Federal Reserve. “We disagree,” said the majority.

“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 justices added.

The court nonetheless permitted Mr. Trump’s firing of Gwynne Wilcox and Cathy Harris, both Democratic members of independent quasi-judicial labour boards, despite federal laws saying that they can only be dismissed for “cause.”

Ms. Wilcox was a member of the National Labor Relations Board (NLRB), which oversees unionisation and other labour disputes from around the country.

Ms. Harris was a member of the Merit Systems Protection Board (MSPB), which protects federal workers from political discrimination and other unlawful employment practices.

The conservative majority said that the Constitution allows Mr. Trump to “remove without cause” officials exercising executive authority on his behalf, “subject to narrow exceptions recognised by our precedents.”

The Supreme Court’s three liberal justices dissented from the ruling, saying the two agency board members should be protected at this stage under a landmark 1935 decision.