Two Republican judges, including one who was just recently appointed by Donald Trump, held on Monday that Trump has the power to fire the head of an obscure federal housing agency. The judges’ reasoning, however, could potentially extend much further, giving Trump authority over other agencies that are intended to be independent of the president.

Most notably, the United States Court of Appeals for the Fifth Circuit’s decision in Collins v. Mnuchin could potentially strip independence from the Federal Reserve’s Board of Governors, giving Trump the power to inject cocaine into the economy just in time to boost his reelection race.

The Fifth Circuit’s decision is unsigned, but it was joined by Judges Catharina Haynes, a Bush II appointee, and Don Willett, a Trump appointee. Willett is, most likely, the primary author of the unsigned majority opinion — the opinion uses footnoted citations instead of embedded citations, and Willett is one of the few federal judges who prefers to put his citations in footnotes.

Enter Judge Kavanaugh

Collins involves the Federal Housing Finance Agency (FHFA), an agency created in 2008 to oversee mortgage-finance stalwarts Fannie Mae and Freddie Mac. The agency is led by a single director, currently former Congressman Mel Watt, who was appointed by President Obama to a five year term. By law, Watt cannot be removed before the end of his term except “for cause.”


Independent agencies — that is, agencies whose leadership cannot be removed at will by the president — are a fixture of the federal government. More than two dozen such agencies exist, one of which was created in the 1880s. A unanimous Supreme Court held that Congress may create such independent agencies in its 1935 decision in Humphrey’s Executor v. United States.

Nevertheless, the FHFA is unusual because it is led by a single independent director and not by a multi-member board. Though most judges who’ve considered the question believe that single-director independent agencies are constitutional, there is one very high profile judge who disagrees with this view — Supreme Court nominee Brett Kavanaugh.

Dissenting in PHH Corporation v. CFPB, Judge Kavanaugh claimed that the president must be allowed to fire the director of the Consumer Financial Protection Bureau (CFPB) at will — and like the FHFA, the CFPB also has a single director who can only be fired for cause during their five year term.

Kavanaugh’s opinion in PHH, however, was relatively moderate compared to the Fifth Circuit’s decision in Collins. Though Kavanaugh’s dissent in PHH contains some ominous language suggesting he might vote to overrule Humphrey’s Executor and invalidate all independent agencies if confirmed to the Supreme Court, the primary thrust of Kavanaugh’s opinion is that it is unconstitutional to have an independent agency led by a single individual.

“Multi-member independent agencies do not concentrate all power in one unaccountable individual,” Kavanaugh wrote in PHH, “but instead divide and disperse power across multiple commissioners or board members.” While ordinary agency heads are “accountable to and checked by the President,” the heads of multi-member independent agencies “although not accountable to or checked by the President, are at least accountable to and checked by their fellow commissioners or board members.” But a single director, according to Kavanuagh, is accountable to no one.


The Fifth Circuit’s opinion in Collins sweeps much broader than Kavanaugh’s attack on single-director independent agencies. Though Collins does point to the fact that the FHFA has a single director and it cites multiple times to Kavanaugh’s PHH opinion, it ultimately concludes that the FHFA’s current structure is unconstitutional for reasons that go far beyond the fact that the agency has a single leader.

“By limiting the President’s power to remove and replace the FHFA’s leadership,” Collins claims, “exempting the Agency’s funding from the normal appropriations process, and establishing no formal mechanism for the Executive Branch to control the Agency’s activities,” the agency violates the Constitution.

What’s troubling about this holding is that it also could describe another federal institution — America’s central bank.

The Fed

The Federal Reserve has two competing goals, to maximize employment while also controlling inflation. It does so by controlling the money supply in the United States — literally the total number of dollars currently in circulation.

When the economy is weak, the Fed can increase the money supply, thereby increasing the amount of money people and businesses have available to conduct transactions and stimulating the economy. If the money supply grows too large, however, there is a danger that each individual dollar will lose value and the currency will inflate. Thus, when the economy is strong and inflation is a concern, the Fed can also contract the money supply in order to restore value to people’s earnings.


Though the Fed’s Board of Governors is nominated by the president and confirmed by the Senate, the Board functions independently of the political branches of government once its members are confirmed. Members of the Board serve 14-year terms, and can only be removed “for cause by the President.”

Central bank independence, moreover, is an essential feature of a liberal democracy that manages its own currency. When the Fed increases the money supply, that can goose the economy and give a boost to the incumbent party in its next election. When it moves in the other direction, that can potentially toss the nation into a recession and tank the incumbent party’s chance of winning the next election.

In the early 1980s, for example, Federal Reserve Chair Paul Volcker intentionally jacked up interest rates and triggered a massive recession in an effort to combat high inflation. This recession is widely credited for Democrats’ landslide victories in the 1982 congressional elections. Two years later, however, after Volcker backed off, the economy roared back to life and all-but-ensured President Reagan’s lopsided victory in the 1984 presidential race.

So if the incumbent president had the power to fire the Fed’s board members at will, that could have catastrophic results for American democracy. Trump could threaten to fire the Fed’s top officials unless they artificially stimulate the economy in 2020. Future presidents could do the same, locking one party into power in the short term and throwing the economy out of balance in the longer term.

Which brings us back to Collins. Recall that the Fifth Circuit’s objection to the FHFA’s structure is that the president has only a limited ability to remove the agency’s leadership, the FHFA’s funding is exempted “from the normal appropriations process” in Congress, and the law establishes “no formal mechanism for the Executive Branch to control the Agency’s activities.”

The same objection could be applied to the Fed. Fed governors serve 14-year terms and can only be fired for cause. The Board has the “power to levy semiannually upon the Federal reserve banks, in proportion to their capital stock and surplus, an assessment sufficient to pay its estimated expenses and the salaries of its members and employees.” And it is intentionally structured so that the Executive Branch cannot force the Fed to change interest rates for political reasons.

Collins, in other words, is a potential recipe for economic and political disaster — a central banking system subject to the whims of Trump’s reelection campaign.

The good news for Americans hoping to vote in a free and fair election in 2020 is that Collins is also an outlier. Even Judge Kavanuagh’s opinion in PHH is primarily a critique of single-director independent agencies and not of multi-member boards like the Fed’s Board of Governors.

But PHH is also the opinion that Kavanaugh wrote as a lower court judge bound by Humphrey’s Executor. If Kavanaugh and his fellow conservatives cut too deeply into independent agencies, Trump could gain a sweeping new power to shape the next presidential election.