The latest clash between the White House and the Federal Reserve has pulled a normally obscure corner of U.S. law into the political spotlight: what actually happens when a Fed chair’s term expires and the Senate refuses to confirm a successor? The answer, which few senators or commentators seem to appreciate, is that the president’s authority is far stronger than Washington’s conventional wisdom suggests. If Jerome Powell’s term ends without a confirmed replacement, President Donald Trump will not be paralyzed. He will choose the next leader of the central bank – whether the Senate likes it or not.
The drama began with Powell’s extraordinary decision to publish a video accusing the Trump administration of trying to undermine the independence of the Federal Reserve. According to Powell, inquiries by the Justice Department into his Senate testimony and the renovation of the Fed’s headquarters were nothing more than political “pretexts” designed to pressure the Fed into cutting interest rates. He offered no evidence, but the media ecosystem instantly amplified the charge.
The White House denied any involvement. U.S. Attorney Jeanine Pirro, whose office issued the subpoenas, went further, explaining that federal prosecutors had repeatedly tried to contact the Fed and had been ignored. Subpoenas, she said, were not a threat but a last resort. The word “indictment” had come only from Powell’s mouth.
If Powell intended to spook the markets, he failed. Stocks ended the day higher, and bond markets showed no sign of panic. Politically, however, his move ignited a frenzy. Senators Tom Tillis and Lisa Murkowski announced that they would withhold support for any Trump nominees to the Fed until the Justice Department’s investigation is resolved. Given the Republicans’ razor-thin majority, that stance could, in theory, block confirmation of Powell’s successor.
The implicit threat was obvious: starve Trump of Senate approvals and thereby keep control of the central bank out of his hands. But this is where the senators’ strategy collides with the actual structure of the Federal Reserve Act.
Most federal offices operate under a simple rule: when a term expires, the officeholder stays in place until a successor is confirmed. This “holdover” provision ensures continuity and prevents vacancies from crippling the government. But the Federal Reserve chair is different.
A Fed chair serves a four-year term as chairman but a fourteen-year term as a governor. When the chair’s four years are up, he does not remain chairman unless the president nominates him again and the Senate confirms. He may still be a governor, but he no longer runs the institution. And tradition strongly discourages former chairs from lingering on the board, because their presence would inevitably undermine the authority of the new leader.
There is also a clause in the law stating that the vice chair presides in the “absence” of the chair. Many assume this covers a vacancy. It does not. The word “absence” was intended to cover short-term situations – travel, illness, or other temporary unavailability – not the expiration of a term.
So what happens when the term ends and the Senate is deadlocked? The answer is not found in the statute. It was found instead in a crisis nearly fifty years ago.
In 1978, President Jimmy Carter faced a hostile Fed chairman of his own: Arthur Burns, a Nixon appointee who frequently criticized Carter’s economic policies. Burns wanted to stay on as chair when his term expired in January of that year. Carter’s advisers debated whether he could be forced out.
At the last minute, Carter named G. William Miller as Burns’s replacement, but left too little time for Senate confirmation before Burns’s term expired. The Carter White House turned to the Office of Legal Counsel for guidance.
Their conclusion was stark: the Federal Reserve Act provides no mechanism for filling a vacancy in the chairmanship. The vice chair cannot automatically assume the role, because a vacancy is not an “absence.” In such cases, the president possesses “inherent authority” to designate one of the governors as acting chairman to keep the executive branch functioning.
Carter then did something no one expected. Instead of sidelining Burns immediately, he issued a presidential order naming Burns himself as acting chair until Miller could be confirmed. Burns served in that interim role for over a month. Only after Miller took office did Burns step aside, declining even to remain as a governor so as not to cast a shadow over the new chairman.
The legal principle established in 1978 has never been overturned.
Later episodes reinforced this interpretation. In 1996, Alan Greenspan’s term expired before his re-nomination was confirmed. The board voted to make him chairman pro tempore, but that action was widely understood as ratifying President Clinton’s intent rather than asserting independent authority.
The same pattern emerged when Jerome Powell was reappointed during the Biden administration. The board again elevated him temporarily, but only after Biden had nominated him. Had Biden chosen someone else, the board would have had no authority to keep Powell in the chair.
The lesson is simple: pro tem arrangements only make sense when they align with the president’s choice. They are not a backdoor for the Senate or the Fed’s governors to defy the White House.
If Powell’s term ends without a confirmed successor, the chairmanship becomes vacant. At that moment, the president, not the vice chair, not the Senate, and not the board, has the authority to designate an acting chairman from among the sitting governors.
Trump’s options are limited to the pool of governors, but that still leaves him with real choices. His own appointees – Christopher Waller, Michelle Bowman, and Stephen Miran – are the most likely candidates. Even if Miran’s term is near expiration, he can remain in place as long as the Senate blocks new confirmations. Ironically, the more obstinate Tillis and Murkowski become, the more they narrow the field to Trump loyalists.
There is, of course, a practical constraint. The Fed chair cannot dictate monetary policy alone. He must command a majority of the Federal Open Market Committee. An acting chairman without credibility inside the institution would struggle to lead. That reality ensures that Trump’s choice must be someone capable of winning at least grudging respect from colleagues.
But the ultimate authority is his. The Senate can delay, obstruct, and posture. It cannot take away the president’s power to decide who runs the Federal Reserve when Powell’s term expires.
Powell’s gambit was meant to paint Trump as a threat to the Fed’s independence and to rally institutional resistance. Instead, it has exposed how little leverage that resistance actually has. Markets shrugged. The legal framework favors the White House. And history is on Trump’s side. When the clock runs out on Powell’s chairmanship, the question will not be whether Trump gets to pick the next Fed leader. The only question will be which of his governors he chooses to place at the helm – temporarily at first, perhaps, but with all the authority that comes with the office.
In Washington, perception often matters more than law. But in this case, the law is clear enough. The presidency, not the Senate, holds the decisive card in the fight over the Federal Reserve’s future. And when Powell’s term ends, Trump’s pick will be in the chair, one way or another.
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