Trump’s unprecedented assault on Federal Reserve independence threatens to destroy the central bank’s century-long protection from political interference, marking the first time in the Fed’s 112-year history a president has attempted to fire a sitting governor.
Story Highlights
- Trump makes historic move to fire Fed Governor Lisa Cook, breaking 112 years of precedent
- Stephen Miran nomination signals intent to reduce Fed independence and lower interest rates
- JPMorgan warns of “existential threat” to Federal Reserve’s constitutional role
- Economic experts fear political interference could destabilize markets and increase inflation
Trump Shatters Federal Reserve Precedent
President Trump has launched an unprecedented attack on Federal Reserve independence by attempting to remove Governor Lisa Cook from office, citing allegations of mortgage fraud. This marks the first time in the Fed’s 112-year history that a sitting president has tried to fire a Fed governor. The move comes after Trump nominated Stephen Miran, a vocal advocate for reduced Fed independence, to fill the vacancy left by Governor Adriana Kugler’s early resignation in August.
Constitutional Crisis Threatens Economic Stability
Legal experts warn that Trump’s actions represent a dangerous erosion of the constitutional framework protecting monetary policy from political interference. Fed governors traditionally serve staggered 14-year terms specifically to insulate them from political pressure, with removal only permitted “for cause” under extremely limited circumstances. This untested legal standard now faces judicial scrutiny as Cook’s removal is challenged, potentially setting a catastrophic precedent for future administrations.
Wall Street Sounds Alarm Over Fed Takeover
JPMorgan analysts have declared Miran’s nomination an “existential threat” to the Federal Reserve, warning that it signals Trump’s intent to amend the Federal Reserve Act and strip the central bank of its traditional authority. The financial giant’s assessment reflects broader market concerns that political control over monetary policy could undermine investor confidence and destabilize the U.S. economy. Jeremy Kress from the University of Michigan emphasized that America’s economic prosperity for the past century stems largely from central bank independence that prevents presidential meddling.
Treasury Secretary Scott Bessent has already called for Fed Chair Jerome Powell to step down as governor when his chair term expires in May 2026, though his governor term extends to 2028. These coordinated efforts suggest a comprehensive strategy to reshape the Fed’s leadership structure and policy direction toward Trump’s preferred approach of lower interest rates.
Long-Term Consequences for American Economy
The erosion of Fed independence poses severe risks to America’s economic foundations, potentially triggering higher inflation and market volatility. International confidence in U.S. monetary policy could collapse, threatening the dollar’s global reserve currency status and America’s economic leadership worldwide. Economists warn that once political interference becomes normalized, restoring central bank credibility may prove impossible, leaving future generations vulnerable to the economic chaos that independent monetary policy was designed to prevent.
The Senate confirmation process for Miran remains the final constitutional check on Trump’s Fed takeover attempt, but with potential Republican support, this critical safeguard may fail to protect America’s economic stability from unprecedented political interference.
Sources:
Trump Nominates Miran to the Federal Reserve Board
Who Has to Leave the Federal Reserve Next?
Federal Reserve Governor Terms Supreme Court Justices Lisa Cook Powell Trump
Trump’s Move to Fire Lisa Cook Threatens Fed Independence
