Trump could target three Fed governors. Removing them may be harder than it looks

• The Fed IG report criticized management of a headquarters renovation that cost about $1 billion more than expected but found no criminal violations or administrative misconduct that would directly support removal for cause.
• A Supreme Court ruling in June 2025 blocked Trump's attempt to remove Lisa Cook, requiring notice and opportunity to respond before removal, and allowing governors to remain in their positions during litigation.
• Former Fed General Counsel Scott Alvarez warns that prolonged litigation could backfire on Trump by keeping targeted governors in their seats longer, with Powell pledging to stay until the legal threat has 'transparency and finality' (his term extends through January 2028).

Summary

President Trump is pursuing potential removal of three Federal Reserve Board governors—Jerome Powell, Lisa Cook, and Michael Barr—though legal obstacles may significantly complicate these efforts.

Key Developments:

A Fed inspector general report released Wednesday criticized management of the central bank's headquarters renovation, which experienced cost overruns of approximately $1 billion. However, the report found no criminal violations or administrative misconduct, providing limited grounds for removals.

Legal Challenges:

The Supreme Court ruled in June that Lisa Cook must receive notice and opportunity to respond before removal, and can remain during litigation. As of August, Cook has received this notice, removing one procedural hurdle, though the administration must still prove "cause" to a court—likely requiring Supreme Court review.

Former Fed General Counsel Scott Alvarez argues that prolonged litigation would allow targeted governors to retain their seats, potentially undermining Trump's agenda. "All have an incentive to litigate and stay," Alvarez noted.

Individual Situations:

• Powell: Term runs through January 2028; vowed to remain until legal threats end "with transparency and finality"
• Cook: Case pending before U.S. District Court Judge Jia Cobb; status report due November 6
• Barr: Under scrutiny for Fed's handling of Silicon Valley Bank's 2023 failure, though preliminary reports don't assign personal responsibility

Market Implications:

The Fed's next interest-rate decision is scheduled for October 28, days before November 3 elections. Trump's ability to influence Fed policy decisions appears limited despite potential institutional damage from legal actions. Attorney General Todd Blanche is reviewing the IG report.