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This week’s FOMC meeting ended as expected Thursday, with central bankers opting to lower interest rates by 25 basis points. President-elect Donald Trump, however, may have been caught off guard by some of Fed Chair Jerome Powell’s comments.
Powell asserted yesterday that he had no intention of leaving his post before his term ends in 2026, even if Trump asks him to step aside.
“No,” Powell said simply when asked during the post-FOMC press conference if he would resign at the new administration’s request.
To be clear, Trump said in June that he would allow Powell — a Trump appointee — to serve out his term. The comments come after the former president threatened to remove Powell during his first term in the White House, an act Powell said Thursday is not legally sound.
Removing a chair, Powell said, is “not permitted under law.”
The comments got us thinking about a topic we’ve talked about before: Trump’s plans for the SEC. I was in Nashville when Trump proclaimed at the Bitcoin 2024 conference that he would “fire Gensler on day one” — a promise that riled up the crowd more than I think even Trump imagined.
There are a few possible outcomes now that we know Trump will be moving back to Washington in January. First, it’s worth noting that agency chairs often resign on their own once the president that nominated them leaves office.
Chair Mary Jo White, who served under the Obama Administration, announced she’d be leaving shortly after Trump was elected. Jay Clayton, White’s successor, did the same after Trump lost his re-election bid in 2020. Both departures gave the incoming president the power to select an interim chair before ultimately submitting a nomination for Senate approval.
We haven’t heard any comments from Gensler yet. But even if he doesn’t step aside before Inauguration Day, legal scholars generally agree that Trump would be allowed to name a current commissioner as acting chair.
The concept of “firing” an agency chair is a bit of a legal gray area, though.
“Courts’ general view is that the president can only remove a commissioner, including the chairman, of the SEC ‘for inefficiency, neglect of duty or malfeasance in office,’” said Jon Ammons, a partner in Reed Smith’s onchain digital asset group.
Regardless, the current consensus seems to be that Commissioner Mark Uyeda would take over for Gensler — at least as acting chair before Trump nominates an outsider. Rumor has it that Robinhood chief legal officer Dan Gallagher, who has had his own unproductive dealings with the securities regulator, is on Trump’s short list.
If I were Gensler, I’d give Powell a call. I bet he already has.
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