The credibility of the US Federal Reserve, the world's most powerful financial institution, is at risk
The Fed faces a challenging period. Inflation has remained above its 2% target for five years, Donald Trump has attacked its independence and Kevin Warsh's tenure as chair has started turbulently. His speech in Jackson Hole on August 28 is shaping up to be crucial.
In the latest attempt to seize control of the Federal Reserve, President Donald Trump has sent a letter to Lisa Cook, a Biden appointee, demanding she respond to baseless allegations of mortgage fraud. This move is reminiscent of his previous efforts to fire Cook, which were unsuccessful due to the Supreme Court's ruling against him.
The current Supreme Court majority, known for its incoherent decisions and narrow application of doctrines, appears to be at the root of Trump's efforts to undermine the Fed's independence. The Court's interpretation of the "unitary executive" principle, which grants the president full control over federal agencies, is seen as incompatible with the idea of an independent Federal Reserve.
This has led to a potential conflict between the Trump administration and the Fed's board, with Cook potentially facing removal a second time. The Court's role in this issue is crucial, as their decisions have created ambiguity about who truly controls the Federal Reserve.
Written by urgent.news from Vox's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
