{"id":356,"date":"2025-08-31T13:02:55","date_gmt":"2025-08-31T13:02:55","guid":{"rendered":"https:\/\/readtrends.com\/en\/trump-remake-federal-reserve\/"},"modified":"2025-08-31T13:02:55","modified_gmt":"2025-08-31T13:02:55","slug":"trump-remake-federal-reserve","status":"publish","type":"post","link":"https:\/\/readtrends.com\/en\/trump-remake-federal-reserve\/","title":{"rendered":"How Trump Could Remake the Federal Reserve"},"content":{"rendered":"<article>\n<p><time datetime=\"2025-08-31T09:01:57Z\">Aug. 31, 2025<\/time> \u2014 A fast-moving legal fight over the attempted removal of a sitting Federal Reserve governor, paired with fresh nominations, could soon hand President Donald J. Trump greater sway over the central bank\u2019s seven-member Board of Governors \u2014 and, by extension, influence over interest rates, Wall Street oversight, and the leadership of the 12 regional Fed banks.<\/p>\n<h2>Key Takeaways<\/h2>\n<ul>\n<li>The White House seeks a board majority by filling vacancies and, if courts agree, removing a governor \u201cfor cause.\u201d<\/li>\n<li>Stephen I. Miran, a Trump economic adviser and Fed critic, has been nominated to replace Adriana D. Kugler after her early departure.<\/li>\n<li>Governor Lisa Cook is fighting removal in court; she has not been charged with a crime and argues the legal standard has not been met.<\/li>\n<li>The Fed\u2019s rate decisions are set by a 12-member FOMC, but a bloc of governors can shape debates and public expectations.<\/li>\n<li>A board majority could pressure regional bank leadership via five-year reappointments due by March.<\/li>\n<li>Regulatory policy for big banks is controlled by the board, allowing rapid shifts with a simple majority.<\/li>\n<li>Only three FOMC members are needed to call special policy meetings, a rule allies could use to press agenda items.<\/li>\n<li>Former officials warn that politicizing personnel and decisions could damage the Fed\u2019s credibility at home and abroad.<\/li>\n<\/ul>\n<h2>Verified Facts<\/h2>\n<p>President Trump has repeatedly urged Chair Jerome H. Powell to cut interest rates and has signaled he wants a friendlier majority on the Board of Governors. With seven seats in total, securing four aligned governors would tilt internal debates, even though rate decisions are ultimately made by the 12-vote Federal Open Market Committee (FOMC) \u2014 the seven governors plus five rotating presidents of regional Reserve Banks.<\/p>\n<p>Adriana D. Kugler resigned months before her governor term was due to end. The president named Stephen I. Miran to succeed her; if the Senate confirms him before the next policy meeting in September, the administration would be one seat closer to a reliable voting bloc.<\/p>\n<p>Separately, Governor Lisa Cook has filed suit to keep her job after the White House cited mortgage-fraud allegations to justify removal. The Federal Reserve Act allows presidential removal of a governor only \u201cfor cause,\u201d generally understood as neglect of duty or malfeasance. Cook has not been charged or convicted and argues the allegations do not meet that threshold.<\/p>\n<p>In Trump\u2019s first term, Christopher J. Waller and Michelle W. Bowman joined the board, and Powell was elevated to chair. Powell\u2019s current chair term ends in May, positioning the president to choose the next leader of the central bank.<\/p>\n<p>Recent votes show rising dissent: Waller and Bowman opposed holding rates steady last month, marking the first double dissent of that stature since 1993. Persistent board-level dissents could reframe internal deliberations and how markets interpret the path of policy.<\/p>\n<h2>Context &#038; Impact<\/h2>\n<p>Board control reaches beyond rates. The seven governors alone approve rules and guidance that shape capital, liquidity, and stress testing for the largest banks. With a majority, the administration could quickly pivot regulatory priorities, including tailoring supervision and recalibrating proposals in the pipeline.<\/p>\n<p>The board also reviews five-year reappointments of all 12 Reserve Bank presidents; what is usually routine could become consequential by March. In 2022, Waller and Bowman abstained on approving Austan D. Goolsbee to lead the Chicago Fed, underscoring how personnel decisions can become flashpoints.<\/p>\n<p>Structural levers exist as well. Legal scholars note the board likely has authority to adjust the geographic lines of the Federal Reserve districts, though whether a district can be eliminated is unclear. The board also influences the Fed\u2019s balance sheet plans and swap-line operations with foreign central banks during market stress.<\/p>\n<p>Process matters: It takes only three FOMC participants to call an additional meeting. If aligned governors repeatedly trigger special sessions to push for faster easing, markets could face heightened volatility and mixed signals about the policy outlook.<\/p>\n<h2>Official Statements<\/h2>\n<blockquote>\n<p>With four aligned governors, the administration could meaningfully steer board actions and priorities.<\/p>\n<p><cite>Gary Richardson, University of California, Irvine<\/cite><\/p><\/blockquote>\n<blockquote>\n<p>Control by March could be used to displace some Reserve Bank presidents during reappointments.<\/p>\n<p><cite>Janet L. Yellen, former Fed chair and former Treasury secretary<\/cite><\/p><\/blockquote>\n<blockquote>\n<p>Calling extra FOMC meetings with a small group could invite mischief that affects monetary policy substance.<\/p>\n<p><cite>Graham Steele, former Treasury official<\/cite><\/p><\/blockquote>\n<blockquote>\n<p>Board authority likely extends to redrawing regional boundaries, though full elimination of a district is uncertain.<\/p>\n<p><cite>Kathryn Judge, Columbia Law School<\/cite><\/p><\/blockquote>\n<blockquote>\n<p>Eroding the Fed\u2019s independence risks projecting dysfunction rather than the prudence markets expect.<\/p>\n<p><cite>Douglas Rediker, former U.S. representative to the IMF<\/cite><\/p><\/blockquote>\n<h2>Explainer<\/h2>\n<aside>\n<details>\n<summary>How the Fed\u2019s power structure works<\/summary>\n<p>The Board of Governors (seven members in Washington) sets bank regulation and, alongside five Reserve Bank presidents, votes on policy in the 12-member FOMC. Regional presidents are chosen by local directors subject to board approval; they are not presidential appointees. Governors serve staggered 14-year terms; the chair serves a four-year term and can be reappointed. By law, a governor may be removed by the president only \u201cfor cause.\u201d<\/p>\n<\/details>\n<details>\n<summary>What a board majority could change quickly<\/summary>\n<p>&#8211; Bank capital and liquidity rules, guidance, and supervisory posture<br \/>&#8211; Senior staff assignments and internal processes at the board<br \/>&#8211; Reappointments of Reserve Bank presidents (every five years)<br \/>&#8211; Communications cadence, including calling special FOMC meetings<\/p>\n<\/details>\n<\/aside>\n<h2>Unconfirmed<\/h2>\n<ul>\n<li>Whether a court will allow the removal of Governor Lisa Cook based on current allegations.<\/li>\n<li>Timing and outcome of Stephen I. Miran\u2019s Senate confirmation ahead of the next policy meeting.<\/li>\n<li>Which, if any, Reserve Bank presidents might be denied reappointment by March.<\/li>\n<li>Whether the board would attempt to redraw Federal Reserve district lines \u2014 and how far that authority extends.<\/li>\n<li>Potential scope and pace of personnel changes among career staff at the board.<\/li>\n<\/ul>\n<h2>Bottom Line<\/h2>\n<p>If the administration assembles a dependable majority on the Board of Governors and prevails in court, it could rapidly redirect the Fed\u2019s regulatory stance, complicate rate deliberations, and pressure regional leadership. Supporters call it a course correction; critics warn it risks undermining the central bank\u2019s independence, a cornerstone of policy credibility and market stability.<\/p>\n<h2>Sources<\/h2>\n<ul>\n<li><a href=\"https:\/\/www.nytimes.com\" target=\"_blank\" rel=\"noopener\">The New York Times<\/a><\/li>\n<li><a href=\"https:\/\/www.federalreserve.gov\/aboutthefed\/bios\/board\/default.htm\" target=\"_blank\" rel=\"noopener\">Federal Reserve Board of Governors<\/a><\/li>\n<li><a href=\"https:\/\/www.federalreserve.gov\/monetarypolicy\/fomc.htm\" target=\"_blank\" rel=\"noopener\">FOMC: Structure and Meetings<\/a><\/li>\n<\/ul>\n<\/article>\n","protected":false},"excerpt":{"rendered":"<p>Aug. 31, 2025 \u2014 A fast-moving legal fight over the attempted removal of a sitting Federal Reserve governor, paired with fresh nominations, could soon hand President Donald J. Trump greater sway over the central bank\u2019s seven-member Board of Governors \u2014 and, by extension, influence over interest rates, Wall Street oversight, and the leadership of the &#8230; <a title=\"How Trump Could Remake the Federal Reserve\" class=\"read-more\" href=\"https:\/\/readtrends.com\/en\/trump-remake-federal-reserve\/\" aria-label=\"Read more about How Trump Could Remake the Federal Reserve\">Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":355,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rank_math_title":"How Trump Could Remake the Federal Reserve | Policy Watch","rank_math_description":"A court fight and new nominations could give Trump a working majority at the Fed, reshaping rates, bank oversight, and regional leadership. Here\u2019s what\u2019s at stake.","rank_math_focus_keyword":"Federal Reserve, Board of Governors, Donald Trump, interest rates, Lisa Cook, Stephen Miran","footnotes":""},"categories":[2],"tags":[],"class_list":["post-356","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-top-stories"],"_links":{"self":[{"href":"https:\/\/readtrends.com\/en\/wp-json\/wp\/v2\/posts\/356","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/readtrends.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/readtrends.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/readtrends.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/readtrends.com\/en\/wp-json\/wp\/v2\/comments?post=356"}],"version-history":[{"count":0,"href":"https:\/\/readtrends.com\/en\/wp-json\/wp\/v2\/posts\/356\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/readtrends.com\/en\/wp-json\/wp\/v2\/media\/355"}],"wp:attachment":[{"href":"https:\/\/readtrends.com\/en\/wp-json\/wp\/v2\/media?parent=356"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/readtrends.com\/en\/wp-json\/wp\/v2\/categories?post=356"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/readtrends.com\/en\/wp-json\/wp\/v2\/tags?post=356"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}