Fact Check: "The Federal Reserve can only be removed 'for cause' before term expiration."
What We Know
The claim that members of the Federal Reserve can only be removed "for cause" before the expiration of their terms is supported by the Federal Reserve Act. According to the Act, specifically in Section 10, the President can remove a member of the Board of Governors only for cause, which implies that a valid reason must be provided for such removal (see source-2). This legal stipulation means that the President cannot arbitrarily dismiss a governor without demonstrating wrongdoing or failure to perform their duties.
Furthermore, a recent article from the Brookings Institution reinforces this understanding, stating that "by law, the president cannot remove a governor except 'for cause,' a legal term that means he would have to show that the person had done something wrong" (source-1).
Analysis
The evidence supporting the claim comes from reputable sources that provide a clear interpretation of the Federal Reserve Act. The Brookings Institution, a well-respected think tank, emphasizes the legal framework surrounding the removal of Federal Reserve governors, highlighting the necessity of demonstrating cause for removal (source-1). Additionally, the Federal Reserve's own documentation explicitly states that governors can only be removed for cause, reinforcing the claim's validity (source-2).
While some discussions around the independence of the Federal Reserve and the implications of potential removals exist, they do not contradict the foundational legal principle that governors are protected from arbitrary dismissal. For instance, a Harvard Gazette article mentions the Federal Reserve Act but does not dispute the "for cause" requirement (source-4). Instead, it focuses on the broader context of the Fed's independence.
The sources used in this analysis are credible and provide a consistent interpretation of the law. The Brookings Institution is known for its rigorous research and analysis, while the Federal Reserve's own publications are authoritative on the matter.
Conclusion
The claim that "the Federal Reserve can only be removed 'for cause' before term expiration" is True. The legal framework established by the Federal Reserve Act clearly stipulates that governors can only be removed for valid reasons, which must be substantiated by the President. This protects the independence of the Federal Reserve and ensures that its members can perform their duties without fear of arbitrary dismissal.
