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The Spectacle Blog
Throughout the Republican debates, Newt Gingrich has curried favor with the GOP base by promising, if elected president, to fire Federal Reserve chairman Ben Bernanke. During Saturday night’s debate in Iowa, for instance, Gingrich told Rep. Ron Paul — the leading Republican Fed critic — that “…I happen to be with you on auditing the Fed and on fund— and frankly on firing Bernanke.”
The problem with this applause line (which Rick Perry also has used) is that the president does not have the power to fire the Fed chair. If Gingrich were elected president, he would find getting rid of Bernanke to be a difficult task.
The Fed is structured to remove the influence of politics from monetary policy. Accordingly, the president nominates candidates for the Board of Governors, but, once approved by the Senate, the governors are granted 14-year terms that can’t be cut short by the executive branch. The chairman of the Board of Governors, also nominated by the president, is limited to four-year terms, but after he’s confirmed the president has no authority to remove him unilaterally. Furthermore, the chairman is also a member of the Board of Governors, so even if President Gingrich were to replace Bernanke when Bernanke’s term expires in 2014, Bernanke could choose to fill out the remainder of his 14-year term as a governor.
Traditionally, Fed chairs and presidents act in concert and without partisanship, and it’s believable that Bernanke would simply step down if Gingrich were elected with a mandate to fire him. But if Gingrich wanted Bernanke gone and Bernanke refused, Gingrich would be faced with two options. The first would be to initiate legal action against Bernanke. The Federal Reserve Act, in section 10.2, stipulates that a governor can only be “removed for cause,” or for some malfeasance. Removing Bernanke for cause, however, would involve proving wrongdoing of some kind, and the process would ultimately be decided by employment lawyers and the legal system, not by Gingrich alone. A spokesman for the Federal Reserve declined to specify which causes might prove grounds for removing a Fed chair, but stated that the “for cause” provision of the Federal Reserve Act is the only means by which a president could end a Fed governor’s term prematurely.
The other option available to Gingrich would be, simply, to amend the Federal Reserve Act to allow the president to fire the Fed chairman at his discretion. Indeed, Gingrich appears to have realized that this would be the best option available. Just yesterday, he hinted at such a strategy, telling a New Hampshire town hall that “[i]f he has not resigned by the time I am sworn in, I will ask Congress to fire Ben Bernanke.” Of course, moving legislation through Congress is vastly more complicated than simply firing an underling.
That it’s not easy to get rid of a Fed chairman is evidenced by the fact that two different presidents tried, or at least considered, removing one chairman — and failed. According to Allan Meltzer, a professor of economics at Carnegie Mellon and the author of an authoritative history of the Federal Reserve, James Tobin, a member of John F. Kennedy’s first Council of Economic Advisers, advocated firing then-Fed chairman William McChesney Martin while on the campaign trail. After the election, however, Martin not only refused to step down, he also eventually was reappointed for another term by Kennedy. In 1969, President Nixon also wanted to remove Martin, and offered him the position of Treasury Secretary. Martin declined, and filled out his term a year afterward.
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More Blog Posts by Joseph Lawler
http://spectator.org/blog/2011/12/13/could-gingrich-fire-bernanke
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Jack in Wi.| 12.13.11 @ 4:52PM
If Ron Paul was elected Bernanke would probably leave on his own. If not the Federal Reserve Act wouuld be amended with the ovewhelming support of Congress. Because if Ron was elected he would have the whole country behind him on the issue. The Fed would also be subject to a full audit as well. There is already huge support for that already. I don't have to worry about Newt. The only time he will get near the White House is if he and his wife take a walk past it.
TrueBlue| 12.13.11 @ 7:56PM
Newt has a higher chance of getting the nomination than Dr. Paul does, mostly because of the lack of unreasonable cult-like followers that remind too many people of the Obamanites.
BrooklynChick| 12.14.11 @ 10:59AM
Sorry, Gingrigh won't win one single state. Believe that!
Ron Paul is going to take the nomination and wipe the floor with Obama.
President Ron Paul. Get used to it.
Ken (Old Texican)| 12.13.11 @ 5:26PM
No.....as President, Gingritch or Perry could simply ask the Republican House to impeach him for "cause" and embarrass him into retiring.
Dan| 12.13.11 @ 7:37PM
"Fire?" No.
Force him out? Yes.
Dan| 12.13.11 @ 7:39PM
It needs to be recalled that a Gingrich victory in the general would be a mandate unlike any seen in our lifetime, and the political powers then possessed by Gingrich would be tremendous, even without a full fillibuster control of the Senate.
Moreover, Gingrich's powers of persuasion are far beyond the normal, were he to couple to those powers the enormous trappings and majesty of the Presidency, ------------- what might not be accomplished?
windrider2| 12.13.11 @ 8:04PM
Jack, there is NOTHING that gets overwhelming support from Congress, which has been in more or less total partisan gridlock for a decade. This is exactly WHY it's so hard to fire the Fed Chairman. This is intentional, to keep one party or another from manipulating the Fed for purely partisan reasons...which is the only reason ANY politician does ANYTHING these days.
And Ken, yes, Gingrich or Perry could no doubt get the House asylum inmates to impeach Bernanke for no reason at all, but the Senate won't convict because they understand that the Fed isn't SUPPOSED to serve political purposes and agendas. Put the fed within the greedy grasp of power-hungry politicians (of either party), and we really WILL be doomed to a collapse we won't recover from in a generation or more. We'll be the formerly great and powerful United States, former superpower, former economic engine of the world.
To give Gingrich, Perry, or Paul the power to fire Bernanke is to put that very same power in the hands of the next liberal Democratic President, whoever s/he may be. And there will be one.
And why stop with being able to fire the Chairman of the Fed? Why not the Supreme Court Justices, too, while we're at it? Perry would be all for that.
Some sleeping dogs are best not roused.
Oldefarte| 12.13.11 @ 10:29PM
After defeating Obama, Bernanke would no doubt simply 'GET DOWN' [ie, RESIGN].......since he is nothing other than Obama's LAP DOG now anyway!!!!!!!!!!!
Margie| 12.14.11 @ 12:29AM
Woof!
Kingofthenet| 12.13.11 @ 10:40PM
Wait let me get this straight, a guy that shilled for Freddie, is going to rebuke Dr. Ben Bernanke?
Kingofthenet| 12.13.11 @ 10:52PM
Hey Callista, Look what I found in some dusty Federal Reserve basement, Ben pulls out Gold Bar...I bet you could make alot of mighty fine Jewelery with this bad boy, i like to give it to you but your Husband seems bent of firing me, what? you'll take care of it? Oh, OK.
BrooklynChick| 12.14.11 @ 11:01AM
Pointless article. Gingrich isn't going to win the nomination and he will NEVER be the President of the United States.
President Ron Paul 2012. Get used to it!