The Supreme Court has twice held since 2020 that statutory restrictions on the President\u2019s removal power violate Article II of the U.S. Constitution. Because such removal restrictions create a measure of policy independence from the President, these cases have prompted discussion about the future of independent agencies generally, with special attention to the Federal Reserve in particular. The Federal Reserve is the most powerful central bank on earth and, arguably, the most important independent agency in the United States. A presidential removal power over Federal Reserve officials calls into question the independence of monetary policy. <\/p>\n\n\n\n
Drawing on overlooked documents and congressional debates, this Article offers a comprehensive assessment of the Federal Reserve\u2019s constitutionality under Article II. We conclude that under the Court\u2019s modern precedent, which requires Congress to clearly state when it wishes to restrict removal, the President likely already enjoys a great deal of statutory authority to remove the Federal Reserve\u2019s leaders. Beyond that, in light of the Federal Reserve\u2019s current structure and functions, the President might have constitutional authority to do so. To the extent the Federal Reserve exercises inherently \u201cexecutive power\u201d\u2014such as initiating enforcement actions, issuing fines, and promulgating consumer-protection rules\u2014precedent suggests that Congress cannot prevent the President from freely removing the Federal Reserve Chair, members of the Board of Governors, and perhaps other senior officials. <\/p>\n\n\n\n
But Congress could render the Federal Reserve\u2019s monetary independence constitutional. That is because the President\u2019s power to fire the Federal Reserve\u2019s leaders does not stem from its primary mission: monetary policy. Congress can use private bank operations to influence monetary policy, which is why the First and Second Banks of the United States were understood to be lawful even though the President could not unilaterally remove all their officers. Thus, Congress should be able to vest monetary policy in a central bank that operates independently from the President. At present, however, Congress has also tasked the Federal Reserve with sovereign functions that fall squarely under the heading of \u201cexecutive power\u201d in a manner that implicates the Court\u2019s modern Article II precedent. We therefore conclude that if Congress wishes to preserve the Federal Reserve\u2019s monetary independence, it should remove those regulatory functions that are inherently executive from the Federal Reserve\u2019s ambit. <\/span><\/p>\n\n\n\n