1A ICYMI: Trump Tries to Remove a Fed Governor
Aug 27, 2025
Mike Byrd, Wall Street editor at The Economist, delves into President Trump's striking attempt to remove Federal Reserve governor Lisa Cook over unfounded allegations of mortgage fraud. They discuss the unprecedented nature of this move and its implications for the Fed's independence. Byrd explores the legal complexities surrounding Cook’s dismissal, as well as the potential fallout in financial markets. The conversation highlights the ongoing tensions between Trump and the Fed over interest rates, raising questions about the future of presidential influence in monetary policy.
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Unprecedented Presidential Removal Attempt
- Trump announced on Truth Social that he was removing Fed Governor Lisa Cook, claiming mortgage fraud without criminal charges.
- The move is unprecedented and raises immediate questions about Fed independence and presidential authority.
Fed Structure Protects Independence
- The Federal Reserve Act grants governors 14-year overlapping terms to protect independence.
- It allows removal only "for cause," a vague standard that has rarely been legally tested.
"For Cause" Is A Legal Wild Card
- The phrase "for cause" lacks clear legal definition and likely requires judicial clarification.
- The dispute over Cook's removal will probably end up before the Supreme Court.