President Donald Trump is making moves to potentially remove some members of the Federal Reserve Board, despite being unable to fire Chair Jerome Powell. Trump’s focus seems to be on Biden appointees like Michael Barr, Adriana Kugler, Philip Jefferson, and Lisa Cook, who are reportedly seeking legal advice in case of dismissal. On the other hand, Trump’s allies like Christopher Waller and Michelle Bowman are safe for now.
The Federal Reserve Act states that governors can only be removed “for cause,” leaving room for interpretation on what constitutes cause. Trump could potentially test this in court, with experts like Alan Blinder suggesting the courts may side with Powell. There is also the option of demotion or lobbying Congress for changes to weaken the Fed’s independence, which Trump’s allies are already rallying behind.
The Federal Reserve’s independence has historically been respected, but Trump’s attempts to remove officials show his disregard for this tradition. Any move to undermine the Fed’s independence could have far-reaching effects on global economies and financial markets. Wall Street is already nervous, and recent comments by Powell caused a significant drop in Bitcoin prices, highlighting the impact of Fed decisions on financial stability.
In conclusion, Trump’s potential actions against Federal Reserve Board members could have significant implications for the economy and financial markets. The legal loopholes he might exploit, like defining “cause” for removal, could set a dangerous precedent for future presidents. It remains to be seen how this situation will unfold and what impact it will have on the stability of the financial system.
