The Guardrails on the Economy Are Up for Grabs

Powell held firm. A Republican senator held firm. Courts held firm. The Supreme Court may undo all of it next month.

May 15, 2026

Today, Jerome Powell’s term as Chair of the Federal Reserve ends. Over the past two years, Powell has endured relentless public attacks for his refusal to lower interest rates at Donald Trump’s request. That was followed by a criminal investigation opened by the Justice Department last January, premised on the claim that he misrepresented renovation costs for two historic Fed buildings in congressional testimony. A federal judge found “essentially zero evidence” of wrongdoing and quashed the government’s subpoenas. The investigation was dropped in late April and referred to the Fed’s inspector general, with an explicit reservation of the right to restart.

Powell fared better than most. Across the federal government, Trump fired commissioners and board members from agencies that Congress established to operate independently of the White House: the Federal Trade Commission (FTC), the National Labor Relations Board (NLRB), the Consumer Product Safety Commission (CPSC), the Equal Employment Opportunity Commission (EEOC), and others. Trump was direct about his intentions when he signed an executive order titled “Ensuring Accountability for All Agencies,” stating explicitly that his administration’s policy is “presidential supervision and control of the entire executive branch,” including agencies Congress designed to be independent of it.

Why Independent Agencies Exist

The Federal Reserve sets interest rates, which ripple through mortgage rates, car loans, savings accounts, and retirement portfolios. The SEC oversees stock markets and protects investors. The CFPB sets rules against predatory lending, abusive credit card fees, and mortgage fraud. The FTC enforces antitrust law and the rules against price-fixing that affect what people pay for goods and services.

When Congress established these agencies, it took steps to ensure they could operate independently of whoever holds the presidency. Agency leaders are nominated by the president but must be confirmed by the Senate. Members serve fixed, staggered terms, so that no single president can appoint an entire board at once. And most relevant to the current situation: members cannot be fired without cause. A president who disagrees with an agency’s decisions cannot simply remove the people making them.

Why Powell Was Protected, and Others Were Not

Powell survived where others did not because of a specific and largely unrepeatable set of conditions that had nothing to do with the legal protections Congress built.

First, Wall Street protected him. The Fed’s decisions move through the economy in ways that financial markets feel immediately and directly. As a result, Trump never followed through on his threats to fire Powell outright, constrained not by the law but by Wall Street’s reaction to the prospect.

The agencies designed to protect consumers and workers have no equivalent constituency. When their commissioners were fired, markets did not react.

Second, one Republican senator stepped in. Thom Tillis, a Republican from North Carolina and a member of the Senate Banking Committee, refused to advance Kevin Warsh’s confirmation as Powell’s replacement until the criminal investigation was dropped, calling it “bogus.” Warsh has since been confirmed. That combination, Wall Street’s self-interest and one senator willing to use his leverage, was the exception, not the pattern.

What the Supreme Court Will Decide

The legal protections Congress established for independent agencies are now before the Supreme Court. The central question is narrow but consequential: Does Congress have the power to protect independent agency leaders from being fired by the president without cause? For 90 years, a 1935 decision, Humphrey’s Executor, has held that it does. Trump is arguing that protection is unconstitutional: that the Constitution gives him control over everyone in the executive branch, and that means he must be able to remove anyone, for any reason.

Trump v. Slaughter, involving fired FTC Commissioner Rebecca Slaughter, and Trump v. Cook, involving the attempted removal of Fed Governor Lisa Cook, are both before the Court this term. A ruling is expected next month. Legal observers describe the conservative majority as likely to side with Trump, which would effectively end the 90-year framework protecting independent agency commissioners.

The Federal Reserve may be treated differently. The Court has already signaled that the Fed occupies a unique constitutional position, given its historical roots in the nation’s earliest banking institutions. That is cold comfort for the people the other agencies are designed to protect: consumers, workers, investors, and anyone whose financial life depends on rules that don’t change based on who won the last election.

What Is Actually at Stake

The question is whether the structural protections Congress spent 90 years building survive. If they do not, the guardrails on the American economy will be set by whoever wins the next election, adjusted with each new administration, and subject to the same political pressures that produce short-term thinking at the expense of long-term stability.

Congress built those protections from hard experience. Next month, the Supreme Court will decide whether they hold.

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