Trump’s assault on the Fed’s political autonomy
By Leon Hadar 9/3/25
President Donald Trump's attempt to fire Federal Reserve Governor Lisa Cook represents an extraordinary test of the central bank's independence and the limits of presidential power. This unprecedented move has ignited a constitutional crisis that will likely reshape the relationship between the executive branch and America's monetary policy institution.
The Constitutional Standoff
The dispute centers on a fundamental question: Can a sitting president remove a Federal Reserve governor at will? Cook, who was appointed by former President Biden in 2022 and is the first Black woman to serve on the Fed board, has categorically rejected Trump's authority to fire her. Her legal challenge argues that Fed governors can only be removed "for cause" under specific statutory provisions—not at the president's discretion.
This legal battle cuts to the heart of the Federal Reserve's design as an independent institution. Since its creation in 1913, the Fed has operated under the principle that monetary policy should be insulated from short-term political pressures. Fed governors serve 14-year terms precisely to shield them from electoral cycles and partisan influence.
The Allegations and Political Context
President Trump's firing letter reportedly cites allegations of mortgage fraud, though the specifics remain unclear. What is clear is that this action follows months of President Trump's public criticism of Fed officials for not cutting interest rates as aggressively as he preferred. This pattern suggests the firing may be more about monetary policy disagreements than any substantive legal violations.
The timing is particularly significant. As the economy faces various pressures and the Fed navigates complex monetary policy decisions, removing a sitting governor over policy disagreements would set a dangerous precedent. It would signal that Fed independence—long considered a cornerstone of American economic stability—is subject to presidential whim.
Broader Implications
The ramifications extend far beyond Ms Cook's individual case. If Trump succeeds, it would fundamentally alter the balance of power in American economic governance. Future presidents might feel emboldened to remove Fed officials who don't align with their preferred policies, turning the central bank into an extension of executive power rather than an independent check on it.
Financial markets have historically valued Fed independence as a source of stability and predictability. A politicized Fed could undermine confidence in American monetary policy, potentially affecting everything from inflation expectations to the dollar's status as the world's reserve currency.
Legal and Historical Precedent
This marks the first time in the Federal Reserve's 111-year history that a president has attempted to fire a sitting governor. The legal framework is untested, making this case particularly consequential for establishing precedent. The Supreme Court may ultimately need to clarify the extent of presidential removal power over independent agency officials.
Previous court cases have generally supported the independence of agencies like the Fed, but the specific question of removal authority has not been definitively settled in this context. The outcome will likely influence not just the Federal Reserve but other independent agencies as well.
The Path Forward
Ms Cook's lawsuit represents more than a personal fight for her position—it's a defense of institutional independence that has underpinned American economic policy for over a century. The speed with which this case may reach the Supreme Court reflects its constitutional significance.
Regardless of one's political affiliation or views on monetary policy, the preservation of Fed independence should concern all Americans who value economic stability and predictability. The precedent set by this case will echo through future administrations and shape the institutional landscape for decades to come.
The coming legal battle will test whether the principles of central bank independence can withstand direct political challenge, or whether we are witnessing a fundamental transformation in how America conducts monetary policy. The stakes could not be higher for both the Federal Reserve and the broader American economic system. END