Jonathan Hartley (Stanford University) has posted The Federal Reserve Substitution Fallacy: Presidential Removal, Early National Banks, and the Limits of Historical Precedent on SSRN. Here is the abstract:
The United States Congress created the Second National Bank in the Bank Act of 1816 with five presidentially appointed directors who could be removed by the President. Its private board majority prevented unilateral presidential direction of ordinary banking decisions. In Trump v. Cook, the Supreme Court invoked that arrangement while denying a stay of a preliminary injunction and in doing so it accepted the tenure provision’s constitutionality for the proceeding, and statutory procedure supplied a sufficient ground for relief. This historical rationale deserves scrutiny without being recast as a final merits adjudication. Why may Congress replace a private governing majority with tenure-protected public officers? Upon further inspection, the original January 1816 bill required a government-director president and expressly authorized his removal and the enacted charter opened the presidency to the full board but retained removal of government appointees. John Quincy Adams also described Biddle himself as removable in 1832 after accepting a government directorship. These records separate personal tenure from control of collective decisions. Congress’s choice to permit removal does not prove that Article II required it. The Sinking Fund Commission and the original Federal Reserve Act supply evidence for congressional latitude and the modern comparison must distinguish Governors, Reserve Bank presidents, and their different routes to FOMC membership. Furthermore, if a regulatory assignment proves incompatible with protected tenure, a court must distinguish severing the tenure restriction from severing that assignment. Hence, it cannot invent separate monetary and regulatory governorships.
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