The Indicator from Planet Money Trump's unprecedented attack on the Fed
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Aug 27, 2025 Tensions are soaring as President Trump takes aim at the Federal Reserve, firing Governor Lisa Cook over allegations of mortgage fraud. This bold move raises questions about the legalities of presidential influence on the central bank. The podcast dives into the historical conflicts over Fed independence, revealing just how fragile that autonomy may be. With discussions on interest rates and political motivations, listeners get a front-row seat to a brewing battle for economic control.
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Politics Meets The Fed's Rate Decisions
- Trump publicly tried to fire Fed governor Lisa Cook after accusing her of mortgage misconduct, breaking norms around Fed independence.
- The Board of Governors helps set interest rates, so politicizing it threatens the Fed's data-driven role.
Historical Clash Led To Fed Independence
- The hosts recount past clashes where presidents pressured Fed officials, including an effective firing under Truman in 1951.
- That episode led to the Treasury-Fed Accord and norms protecting Fed independence.
Legal Protections Are Limited But Significant
- The Federal Reserve Act limits removal of governors to "for cause," usually meaning negligence or malfeasance.
- Recent Supreme Court language suggested the Fed might be treated as a special case amid broader rulings on removal powers.