President Donald Trump released a letter claiming to fire Lisa Cook, a Biden-appointed member of the Federal Reserve Board, as part of an effort to fill the board with loyalists. The move seeks to secure a presidential majority on the seven-person board and increase influence over monetary policy. The Supreme Court's willingness to discard precedent and accept broad removal powers has enabled expanded assertions of presidential authority. The Federal Reserve can create money and has frequently used that power since the 1950s, expanding further after the 2008 crisis by providing targeted support to financial firms. Federal law permits removal of governors only for cause.
On Monday evening, President Donald Trump opened up a new front in his campaign to take control of the Federal Reserve. He released a letter on social media purporting to fire Lisa Cook, a Joe Biden-appointed member of the Fed's seven-person board of governors. The letter is part of what appears to be a coordinated effort by the administration to fill a majority of the board with loyalists.
Conventional wisdom has been that, given the dangers of putting an infinitely extensible balance sheet under the control of a single person, the Fed will survive Trump's onslaught. Although the Fed's board is not wholly independent of the president-its members are selected by him-the president is not legally permitted under the Federal Reserve Act to remove board members at will or direct how they carry out their duties. The law authorizes the president to remove board members only for cause.
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