Supreme Court decisions in June might reshape the president’s removal powers, including whether the president can fire members of the Federal Reserve Board, according to Aaron Nielson, a professor of law at the University of Texas at Austin.
Nielson explained the constitutionality of the Federal Reserve and executive powers in the administrative state in a lecture hosted by the Hillsdale College Federalist Society and moderated by Joseph Postell, associate professor of politics, on Feb. 4.
“This is going to be the big issue of this year’s Supreme Court,” Nielson said. “For the first time ever, we’re having multiple issues at the United States Supreme Court that implicate the Federal Reserve.”
Nielson previously worked as a Texas solicitor general, a partner at Kirkland & Ellis, and a clerk for Supreme Court Associate Justice Samuel Alito. He is also the recipient of the 2021 Federalist Society Joseph Story Award.
During COVID-19, Nielson was appointed by the U.S. Supreme Court as amicus curiae, or friend of the court, in Collins v. Yellen. He was tasked with researching the constitutionality of administrative agencies drawing from Article II of the U.S. Constitution.
“I came up with every possible argument left in favor of independent agencies, all of them, and I gave them all to the Supreme Court,” Nielson said. “The Supreme Court rejects them all. Massive defeat. Alito writes the opinion, and he goes through my brief line by line, wrong, wrong, wrong, wrong.”
Nielson said his research on the constitutional question of administrative agencies is a starting point for deeming multiple functions of the Fed unconstitutional, and the Supreme Court’s rejection of his argument supports this idea.
The Fed has necessary functions such as regulating monetary policy, but Congress has added legislative powers over the years, making it functionally unconstitutional, Nielson said.
“The big problem for the Fed is not the core function of the Fed, which is monetary policy,” Nielson said. “The problem is with all these extra powers that Congress has put on the Fed.”
Nielson’s solution is to model the Fed after the historic First and Second Banks of the United States. With the upcoming decisions of the Supreme Court, such as Humphrey’s Executor, which addresses executive removal powers, the powers of the president regarding administrative agencies might change drastically.
“In June, you’re going to get a case about whether the president can fire the Federal Trade Commission commissioners and overrule Humphrey’s Executor. The answer is almost certainly going to be yes,” Nielson said. “You’re going to have the question: Can a president fire the Federal Reserve Board members? I think the answer is going to be no.”
Nielson visited the University of Michigan’s Law School the day after. At Hillsdale, his talk highlighted many insightful topics for undergraduate students in Hillsdale’s Federalist Society, according to junior and President of Federalist Society Isabella Walsh.
“He presented a slideshow with different cases to help enlighten us undergraduates, and as he is a distinguished law professor and legal scholar,” Walsh said. “Something impressive about him is that he has argued as a solicitor general of Texas before the Texas and Supreme Court.”
The talk provided a detailed background into the history of removal powers regarding government agencies, senior Luke Wong said.
“I thought he was able to encapsulate the constitutional, legal, and political issues with the administrative state, while still acknowledging why keeping the Federal Reserve’s monetary policy independent from the Executive Branch was important,” Wong said. “I think as a graduate level law professor, Nielson did an excellent job making the topic digestible to undergraduates, and also conveying its importance.”
