The Supreme Court's Fed Carveout: An Initial Assessment

Abstract

On May 22, the Supreme Court carved out the Federal Reserve from its ruling on an emergency application to stay two district court judgments in favor of independent agency heads who were illegally terminated by President Trump. The majority’s reasoning amounts to a single sentence: “The Federal Reserve is a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States.” There are three claims in this sentence: that the Federal Reserve is unique, that it is quasi-private, and that it follows in a distinct historical tradition. This Essay analyzes each claim as well as the Court’s assertion that the Federal Reserve Board is distinguishable from the other agencies at issue. It concludes that the Court’s carveout is a judicial brick without straw. The Federal Reserve's Board of Governors is not unique. (It is an ordinary multimember commission.) It is not quasi-private. (It is a government agency.) And it does not follow in the tradition of the Bank of the United States in the relevant sense. (It is not a bank, it is a bank regulator. The First and Second Banks were banks, not bank regulators. The present-day analogs to these early federal banks, which did a general banking business with the public, are today's national banks, e.g., JPMorgan Chase and Bank of America.)