U.S. Federal Reserve Chair, Jerome Powell and U.S. President Donald Trump. Annabelle Gordon | Kevin Lamarque | ReutersIf President Donald Trump tries to fire Federal Reserve Chair Jerome Powell, it would almost certainly set off a courtroom battle that legal and policy experts say is bound to get messy, with uncertain impacts on the central bank, financial markets and the economy.The tempestuous situation poses a myriad of thorny questions for which there are no easy answers considering no president ever has tried to unseat a Fed chair.Among them:Does Trump have the authority to remove Powell? The answer is almost certainly no, not without meeting the legal threshold of “cause.” However, that raises additional questions over what would constitute cause, with growing suspicion in Washington and Wall Street that the president is using criticism over the Fed’s building expansion as a pretext to establish that condition.What happens next from a legal standpoint? Most people familiar with the situation say Powell would sue if Trump tries dumping him. The case likely would head to the Supreme Court, which ruled recently that the quasi-governmental Fed is a special entity immune from arbitrary personnel moves regarding governors. But that didn’t address the issues surrounding cause.Beyond a lawsuit, what else could Powell do? If he gets fired as chair of the Board of Governors, the Federal Open Market Committee, which is the Fed body that sets interest rates, simply could retain Powell as chair, giving him continued influence over monetary policy. The FOMC chair historically has been the Fed board chair, but that’s not a requirement.Does Trump really want to fire Powell, or is he simply setting him up as a scapegoat should the economy go south? The president has shown himself to be a shrewd and often times calculating political player, and having Powell around as a punching bag could be useful as crucial mid-term elections approach. …
