Marketplace All-in-One Trump continues attacks on Fed leadership
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Aug 21, 2025 Tensions rise as President Trump calls for Federal Reserve Governor Lisa Cook's resignation over mortgage fraud allegations, but she stands strong against the pressure. The labor market shows signs of weakening, shaping discussions ahead of the Fed's Jackson Hole conference. Experts debate potential interventions as job seekers dwindle amidst inflation worries. Additionally, concerns about 'AI psychosis' are voiced by Microsoft's AI chief, highlighting the growing societal implications of artificial intelligence.
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Limits On Firing Fed Governors
- President Trump demanded Fed Governor Lisa Cook resign after accusations of mortgage fraud, but Cook rejected being "bullied to step down."
- The Banking Act of 1935 limits removal of Fed governors to "for cause," typically corruption or serious misconduct.
One Vote Won't Change Fed Policy
- Replacing one Board of Governors member only adds a single FOMC vote and doesn't guarantee lower rates.
- The FOMC includes regional Fed presidents, so changing one governor won't necessarily sway policy.
Labor Slowdown Shapes Fed Decisions
- The labor market has slowed: job openings and hires are down while vacancies still exist.
- The Fed watches labor weakening closely because it could prompt interest-rate cuts if inflation eases insufficiently.