Key Takeaways:
The US Supreme Court handed President Donald Trump the power to fire leaders of more than two dozen independent federal agencies, overturning a 1935 precedent that had shielded regulators from political interference for nearly a century.
The 6-3 ruling in Trump v. Slaughter struck down for-cause removal protections for members of the Federal Trade Commission, the National Labor Relations Board, the Consumer Product Safety Commission and similar multimember bodies, declaring them "contrary to the separation of powers enshrined in the Constitution."
"The FTC unquestionably exercises executive power, and must therefore be controlled by the Chief Executive, in whom such power is vested," Chief Justice John Roberts wrote for the majority, which included Justices Alito, Gorsuch, Kavanaugh, Barrett and Thomas. "Subordinates who exercise the President's power are subject to removal by him. Then, and only then, can they remain accountable to the President, and the President to the people."
The decision reverses Humphrey's Executor v. United States, the 1935 case that had permitted Congress to insulate certain agency officials from at-will presidential firing. That ruling had underpinned the structure of independent commissions for generations, allowing them to operate with bipartisan membership and fixed terms. The court found the modern FTC — which enforces roughly 80 statutes covering nearly every facet of the US economy, collects billions in civil penalties and promulgates rules carrying the force of law — bears little resemblance to the agency described in the 1935 opinion.
Justice Sonia Sotomayor, writing for the three liberal dissenters, accused the majority of discarding "centuries of political practice" and giving the president "a power unknown even to the English Crown against which the Founders revolted."
The Fed Carve-Out
In a critical distinction for financial markets, the court explicitly exempted the Federal Reserve from its ruling. Roberts wrote that the Fed follows "in the distinct historical tradition of the First and Second Banks of the United States," both of which influenced monetary policy without being subject to plenary presidential control. The court separately ruled that Trump could not immediately fire Fed Governor Lisa Cook, finding he had not given her sufficient opportunity to contest his allegations of mortgage-related misconduct.
The exemption removes the most immediate risk to bond markets — the prospect of political interference in monetary policy decisions. The 10-year Treasury yield had fluctuated in the weeks before the ruling as traders priced in varying probabilities of a Fed independence challenge. The court's explicit protection for the central bank effectively caps that uncertainty for now, though the long-term legal foundation for the Fed's special status rests on historical tradition rather than a clear constitutional rule, leaving open the possibility of future litigation.
Regulatory Landscape Upended
The ruling affects agencies that oversee labor relations, workplace safety, consumer products, nuclear energy, chemical hazards and federal employment disputes. The NLRB, the Consumer Product Safety Commission, the Nuclear Regulatory Commission, the Merit Systems Protection Board and the Chemical Safety Board all face potential restructuring as their leaders become removable at will.
Trump had already fired multiple independent board members before the court ruled on the underlying precedent, including officials at the NLRB, the MSPB and the CPSC. An RMG Research poll last year found that 75% of Washington-area federal employees earning at least $150,000 who voted for Kamala Harris in 2024 said they would disobey a lawful Trump order if they considered it bad policy — a finding the White House cited as evidence that removal protections had enabled bureaucratic resistance.
Justice Gorsuch, in a concurring opinion, warned that the ruling concentrates not just executive power but also the vast legislative and judicial authority Congress delegated to independent agencies over the past century. "The fourth branch's powers still exist; they have just been reassigned to the President," he wrote, calling on the court to also revive its nondelegation doctrine to prevent the accumulation of lawmaking and adjudicative functions in the White House.
This article is for informational purposes only and does not constitute investment advice.
