The threat to fire Powell is getting real

President Trump's war on the Federal Reserve is taking a more concrete, legally actionable form — putting the central bank's independence in the crosshairs.Why it matters: For months, Trump's exasperation with Fed chair Jerome Powell over not cutting interest rates has taken the form of increasingly angry comments and social media posts.That pressure has entered a new phase that, if successful, could shock the global financial system.It would also set a new precedent for a president's ability to bend the leader of the world's most important central bank to his will.The big picture: Trump's appointees are trying to lay out legal predicates to fire Powell for cause — specifically, that the Fed's $2.5 billion headquarters renovation project has included changes not approved by a federal planning authority, and/or that Powell lied to Congress about the project.That was the subtext of Office of Management and Budget director Russ Vought's letter to Powell last week.Powell denied to Congress last month that the project contains several luxury features. Vought's letter suggests that the Fed had changed plans that were blessed by the National Capital Planning Commission in 2021, thereby violating the National Capital Planning Act.Also last week, the president installed allies, including the White House staff secretary, to that very commission — normally the province of architects and historical preservationists.State of play: The new NCPC members have been quick to toe the White House line on the Fed's project.The new NCPC chair, Will Scharf — also a former personal lawyer to the president — said at an NCPC meeting last week that the Fed project includes "serious deviations" from plans the NCPC had approved.It looks like a "Taj Mahal near the National Mall," fellow Trump-appointed commissioner Michael Blair said, per reporting from Axios D.C.'s Cuneyt Dil.The other side: The Fed, as is its style, is responding in a restrained and legally precise way. It published an FAQ over the weekend to explain why its leaders believed the project was necessary and how it got so expensive — and looking to correct the record on some exaggerated reports of luxury features.The FAQ articulates the Fed's position that the Board of Governors alone controls its real estate decisions under the Federal Reserve Act, and that its cooperation with the NCPC is voluntary.Also Monday morning, as Axios first reported, Powell asked Fed inspector general Michael Horowitz to review the cost overruns and any other matters involving the building he deems appropriate.Yes, but: That's typical of the Fed's quiet, circling-the-wagons approach when it is in the thick of political disputes.It also may amount to bringing an FAQ to a gunfight, given the Trump administration's willingness to ignore norms and play legal hardball.Reality check: The building project has been underway — and cost overruns public knowledge — for years. There is little doubt that the administration's focus on the renovation is driven by the president's fury at Powell for not cutting interest rates.The reason the Federal Reserve Act gives the Board of Governors such sweeping authority over its real estate to begin with is precisely to ensure its independence from the political tides.The bottom line: We don't know if the president will attempt to use the legal strategy his aides are charting out to fire Powell, and if he does, we don't know if he will succeed.But if that were to happen, it would create a new world in which the president can use an obscure planning commission to coerce the world's most important central bank.

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