Marketplace All-in-One Can the president remove a Fed governor?
Aug 26, 2025
In this discussion, Sarah Binder, a Senior Fellow at the Brookings Institution and political science professor, dives into President Trump's attempt to remove Fed Governor Lisa Cook over dubious mortgage fraud claims. She unpacks the delicate balance of power and potential consequences of political interference at the Federal Reserve. The conversation reveals how such actions could undermine public trust and affect interest rates, while also touching on FEMA's crucial funding challenges in disaster mitigation. It's a thought-provoking look at economics in action!
AI Snips
Chapters
Transcript
Episode notes
Political Pressure Can Raise Rates
- Undermining Fed independence can raise long-term interest rates via bond market expectations.
- Political pressure may backfire by increasing inflation risk premiums and borrowing costs.
Deficit Pressure On Long‑Term Rates
- The budget deficit is a core driver of long-term interest rates alongside Fed credibility.
- Rising government debt makes investors demand higher long-term yields regardless of Fed actions.
For‑Cause Protection Limits Removal
- The Federal Reserve Act gives governors for-cause protection from removal, not removal for policy disagreements.
- Cause typically means inefficiency, neglected duty, or malfeasance and would require court review if contested.