Trump’s Fed power grab is the big test for the institutions that have sanctioned his lawlessness.
In response to President Trump’s illegal firing of Federal Reserve Governor Lisa Cook, the Revolving Door Project Founder and Executive Director Jeff Hauser released the following statement:
“Failing institutions and their weak leaders have emboldened Trump to pursue control of the Federal Reserve. Attacking Board Governor Lisa Cook is part of this larger strategy. If the country, and its economy is to survive, these players must find a spine and stop enabling Trump’s authoritarian behavior.”
The following institutions have enabled this attack on Fed independence:
- The Supreme Court: Trump attacking “even the Federal Reserve” is the inevitable culmination of the Supreme Court’s disregard for settled precedent, historical practice, and common sense. The court has forced agencies that were made independent by acts of Congress to become vassals of a power-mad president. Justice Alito’s impotent footnote to protect the Fed was designed to appease greedy and myopic investors, but it does not provide any legal reason to view the Federal Reserve as “more justifiably independent” than the Federal Trade Commission (FTC). Indeed, there are reasons (e.g., the role of private banks within the regional Reserve Banks and the historical controversy over a national bank) to view the Fed as presenting a slightly weaker case for independence.
- Federal Reserve Chair Jay Powell: Powell, Trump’s 2017 Federal Reserve Chair pick whom we have criticized throughout his tenure, has not delivered strong growth, a remotely acceptable income distribution, or stable prices. He, as we expected, presided over banking instability that far too many have forgotten, and his failure to address the climate crisis makes further economic instability inevitable. Despite his failures as a regulator, Powell has cultivated Congress and the press like a master. If Powell and his legal team fight hard for Cook, there is a reasonable chance that the Federal Reserve’s independence will be vindicated, as evidenced by the Supreme Court’s unwillingness to erode Fed independence in CFPB v. CFSA. Despite this strong chance of victory, The Revolving Door Project expects Powell to cow to Trump’s threat, as the looming attack on Cook was not enough to motivate Powell to invoke “Fed independence” at Jackson Hole.
- The media: The sentiments of former FTC Commissioner Alvarao Bedoya, himself the victim of Trump’s attack on law, are apt: “Dear journalists: The President has not fired Lisa Cook. The President is *trying* to illegally fire her. Your words shape people’s reality. Please be accurate in your reporting.” Failure to accurately report on Trump’s actions grant his lawless behavior the presumption of legality, something that he, a convicted felon, does not merit.
People who value democratic institutions and an economy not dictated by the whims of the president must pressure the Supreme Court, Jay Powell, and the media to do better in the case of Lisa Cook, and Trump’s other attacks on the rule of law.
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