Following the Justice Department’s investigation into Federal Reserve Chair Jerome Powell, several Republican lawmakers have voiced their opposition. Senator Thom Tillis has vowed to block all future Federal Reserve nominations until the legal matter is resolved, citing concerns over the administration’s attempts to undermine the Fed’s independence. Other senators, including Lisa Murkowski and John Kennedy, have also expressed support for an independent Fed. The investigation is reportedly linked to Powell’s testimony regarding the headquarters renovation costs and the administration’s frustration with the Fed’s interest rate policy, which President Trump has publicly criticized.
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In a recent ruling, a judge has blocked a former president from removing Federal Reserve Governor Lisa Cook. The judge’s preliminary injunction cited that the removal attempt violated the Federal Reserve Act’s “for cause” provision, which limits grounds for removal to actions related to the Governor’s behavior in office. This decision allows Cook to participate in upcoming Fed meetings. The former president’s effort to remove Cook followed months of pressuring the Fed to lower interest rates, and stemmed from allegations of mortgage fraud that occurred before Cook joined the Fed.
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The Supreme Court ruled that President Trump could remove two federal agency board members, Gwynne Wilcox and Cathy Harris, while their lawsuits challenging their termination are pending. This decision, while allowing the removals, strongly implied that Federal Reserve board members possess unique protection against presidential dismissal. The Court’s majority reasoned that the executive power vested in the President allows removal of executive officers, subject to limited exceptions. However, a dissenting opinion argued this ruling undermines established precedent protecting the independence of administrative agencies, including the Federal Reserve, and creates an unnecessary exception. The Court’s stay order temporarily allows the removals but does not definitively resolve the broader constitutional questions involved.
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John Q. Hosedrinker