• by Wendy Davis  @wendyndavis, April 22, 2025

President Donald Trump's ouster of Federal Trade Commissioners Rebecca Slaughter Kelly and Alvaro Bedoya, if upheld in court, could “seriously harm monetary and financial stability.”

That's according to professors at Harvard and Columbia law schools, who argue in a friend-of-the-court brief filed Monday that a judicial endorsement of the ousters would signal that Trump could also fire Federal Reserve Board chair Jerome Powell.

A ruling allowing Trump to expel FTC members “could seriously harm monetary and financial stability by signaling to markets that the independence of the Federal Reserve System is jeopardized,” Harvard's John Coates and Columbia's Jeffrey Gordon, Kathryn Judge, and Lev Menand argue in papers filed with U.S. District Court Judge Loren AliKhan in Washington, D.C.

Their papers come in a battle that began last month, when Trump expelled Bedoya and Slaughter from the FTC, leaving the agency without any Democratic commissioners.

Bedoya and Slaughter sued over the move, arguing that a president can only fire an FTC commissioner for three reasons -- inefficiency, neglect of duty, or malfeasance in office. They are seeking a judicial declaration that their firing was illegal, and an order reinstating them to the commission.

The FTC was established by Congress an independent five-member commission, with each member appointed for a term of seven years and removable only for “inefficiency, neglect of duty, or malfeasance in office.”

Bedoya was confirmed by the Senate in 2022 and his term wasn't set to expire until September 25, 2026. Slaughter joined the FTC in 2018, and was confirmed for a second time in March 2024. Her term wasn't slated to expire until September 2029.

The ousted commissioners point to the Supreme Court's 1935 decision in a case called Humphrey's Executor, which involved President Franklin Roosevelt's attempt to fire an FTC commissioner. The Supreme Court said in that matter that Franklin Roosevelt lacked authority to dismiss an FTC member without cause.

The law professors siding with Bedoya and Slaughter argue that a ruling against them could be viewed as undermining the independence of the Federal Reserve System.

“The Fed’s independence rests on the same legal foundations as the independence of the Federal Trade Commission,” the professors write.

“Denying the plaintiffs’ motion would immediately call into question the Fed’s independence from the White House, with potentially adverse consequences for economic and financial stability,” they add.

They also note that Trump's recent statements -- including his remarks that “Powell’s termination cannot come quick enough” -- have “generated enormous instability,” referencing this month's stock market volatility and “technical breakdowns” in bond markets.

“Those recent gyrations could prove to be mild relative to the dysfunction that might ensue if investors fear that the President could exercise control over how the Fed navigates future instability,” the professors write.

“The Court should not undermine the carefully calibrated institutional design of the Federal Reserve, which tenures members of the Federal Reserve Board and prevents the President from removing them (or demoting the Board Chair), except for cause,” they add.

Separately, attorneys general from 20 states and the District of Columbia also sided with Bedoya and Alvaro in a friend-of-the-court brief filed late last week.

The attorneys general argue that Trump's attempt to fire the Democratic commissioners “is an affront to the rule of law” because the move ignores the precedent established by the Supreme Court in 1935.

They add that the FTC's bipartisan structure “promotes well-reasoned decisions.”

“Commissioners in the minority can publish dissents which serve valuable purposes: they foster public debate, force the majority to defend its position, and encourage transparency,” the attorneys general write.

AliKhan plans to hold a hearing in the case on May 20.