Future of Federal Reserve's Independence Debated After Cook’s Dismissal

President Donald Trump on Monday removed Lisa Cook from her position on the Board of Governors of the Federal Reserve. The move has caused debate about the future of the Fed.

The Details: In a letter addressed to Cook, Trump said there was "sufficient evidence" that Cook made false statements in mortgage agreements. A lawsuit filed by Cook against Trump says Cook's ouster violates the Fed’s independence, and violates Cook's constitutional right to due process.

Separation of Powers: The Wall Street Journal Editorial Board (Lean Right bias) wrote the Justice Department may argue “for cause” limits on Trump’s removal of Fed Governors violate the separation of powers, though the Supreme Court has not directly ruled on the Fed. Both the Editorial Board and an analysis in The Economist (Lean Left) warned of previous examples of presidents taking control of central banks, citing high inflation in Turkey and Argentina, and Nixon’s pressure on Fed Chair Arthur Burns.

Inflation and Economic Risks: The Economist analysis said Trump’s firing of Cook marks a significant escalation in his campaign against independent central banking. It warned that undermining the Fed’s credibility could make controlling inflation and maintaining investor confidence in US debt more difficult, and noted that if political control of the Fed becomes a consistent Republican demand across election cycles, the politicization of monetary policy is near-inevitable.

‘The Fed is Unconstitutional’: On a podcast for the National Review (Right), senior editor Charles C.W. Cooke (Right) argued that while he believes “the Federal Reserve works quite well,” and that Trump’s views on monetary policy are incorrect, he still thinks the Fed is “unconstitutional” as it’s currently structured. He said, “I don’t think there is any enumerated power that provides for the creation of the Federal Reserve,” and added that conservatives defending its independence often do so for “specious and often cowardly reasons.

Written by the AllSides staff (of humans). Learn more. Support our mission. Suggest an improvement to this summary.