Public Law 63-43 Section 10, The Federal Reserve Board & 2026 Power Shifts

Under Public Law 63-43 Section 10 (codified as 12 U.S.C. § 241), the Federal Reserve Board of Governors is established as the central governing body of the U.S. monetary system. This section dictates who can sit on the Board, how they are appointed, and—most critically in 2026—the legal extent of their independence from the White House.

Most people think of “The Fed” as a vague entity that changes interest rates, but Section 10 of the Federal Reserve Act of 1913 is the actual legal DNA that makes it function. In 2026, this century-old statute has moved to the center of a massive constitutional tug-of-war.

As of early 2026, the executive branch has begun challenging the “independence” clauses of Section 10. While the law was designed to keep political hands off the printing press, recent Supreme Court trends and executive orders are testing whether the President can bypass the traditional 14-year term limits specified in this section.

What You Must Know: The Structure of the Board

Section 10 doesn’t just “create” the Board; it sets strict demographic and professional requirements that the President must follow when making appointments.

1. The Composition of the Seven

The Board consists of seven members appointed by the President and confirmed by the Senate.

• The Term: Each member serves a 14-year term. These terms are staggered so that one expires every two years, preventing any single President from “packing” the Fed in one term.
• The “Fair Representation” Rule: The law explicitly requires the President to give “due regard to a fair representation of the financial, agricultural, industrial, and commercial interests, and geographical divisions of the country.”
• Geographic Limits: No more than one member can be selected from any single Federal Reserve District.

2. The Community Bank Requirement

A 2015 amendment to Section 10—which is highly relevant to local lenders in 2026—requires at least one member of the Board to have primary experience in or supervising community banks (those with less than $10 billion in assets).

What You Came to Know: The Power Struggle of 2026

Here is the truth: Section 10 is currently facing its biggest threat in history. The “expertise gap” is whether a President can fire a Fed Governor “at will” (for any reason) or only “for cause” (for doing something illegal).

The Removal Power Conflict

Section 10 states that members serve their terms “unless sooner removed by the President for cause.” In 2026, the administration has argued that under the Unitary Executive Theory, any official exercising significant executive power (like banking regulation) must be removable at the President’s whim.

If Section 10’s “for cause” protection is struck down by the courts this year, the Federal Reserve’s independence could effectively end, making monetary policy a direct tool of the sitting President.

The Conflict of Interest Rules

Section 10 is also the law that “cleans” the Fed of private bank influence. It mandates that:

• No member can hold office or employment in any member bank.
• Before taking office, members must certify under oath that they have divested from banking interests.
• Members are barred from taking a job at a member bank for two years after leaving the Board (if they leave before their term expires).

Key Terms in Section 10

• Ex Officio: Originally, the Secretary of the Treasury and Comptroller were “ex officio” members (members by virtue of their office). The Banking Act of 1935 removed them to increase the Fed’s independence.
• Elastic Currency: The original goal of Section 10 was to provide a currency that expands and contracts based on the needs of the economy.
• Adjudication: The Board’s power to make formal legal judgments on bank mergers and regulatory violations.

💡 Pro Tip

If you are tracking interest rates or inflation in 2026, don’t just watch the Chairman. Watch the vacancy dates in Section 10. Because terms are staggered, a President who ignores the “geographic division” or “community bank” requirements of Section 10 can have their appointments challenged in court, potentially freezing Fed policy for months.

FAQ

Does Section 10 allow the President to set interest rates?

No. Section 10 gives the Board the power to oversee the system, but the actual setting of rates is handled by the Federal Open Market Committee (FOMC), which includes regional bank presidents.

Can a Fed Governor be fired for raising rates?

Legally, no. Section 10 protects them from being fired for policy disagreements. They can only be removed “for cause” (misconduct).

How much does a Board member make in 2026?

Salaries are set via the Executive Schedule. The Chair is Level I ($246,400+) and other members are Level II, though these figures are adjusted annually for inflation.

Why are the terms 14 years long?

To ensure that a Fed Governor outlasts the President who appointed them, insulating the economy from short-term election cycles.

Official Sources & Legal Links

• Federal Reserve Board: Official Text of Section 10
• Legal Information Institute: 12 U.S. Code § 241
• National Archives: Full Text of Public Law 63-43 (Federal Reserve Act)

Take Action: Monitoring Your Legal Rights

The changes to Public Law 63-43 impact everything from your mortgage rate to the stability of your local bank. If you are a business owner or a community banker, you must conduct a regulatory compliance audit to see how new Board appointments may shift enforcement priorities in 2026.

Disclaimer: This article provides educational information on Public Law 63-43 as of January 2026 and is not a substitute for professional legal or financial advice. Central bank regulations are subject to rapid change; always consult a qualified professional for your specific needs.

Stay informed, stay protected. — AllAboutLawyer.com

Last Updated: February 1, 2026 — We keep this current with the latest legal developments

About the Author

Sarah Klein, JD, is a licensed attorney and legal content strategist with over 12 years of experience across civil, criminal, family, and regulatory law. At All About Lawyer, she covers a wide range of legal topics — from high-profile lawsuits and courtroom stories to state traffic laws and everyday legal questions — all with a focus on accuracy, clarity, and public understanding.
Her writing blends real legal insight with plain-English explanations, helping readers stay informed and legally aware.
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