The Federal Reserve, one of the world’s most powerful institutions, controls the U.S. money supply and interest rates. It played a crucial role in stabilizing the global financial system during the 2008 crisis. However, it has faced threats from the Trump administration. President Trump has criticized Fed Chair Jerome Powell, calling him a “major loser” and teasing the possibility of firing him. Despite walking back from this idea, Trump’s second term has seen mass firings of government employees. The president’s power over independent agencies like the Fed is legally constrained. The Federal Reserve was designed by Congress to be independent of the president, with the chairman serving a fixed term and removable only for cause. The independence of the Fed is critical to preventing short-term political interests from conflicting with the national interest. A Supreme Court case involving the National Labor Relations Board and the Merit Systems Protection Board could potentially impact the Fed’s independence if the unitary executive theory is embraced, allowing the president to fire members of independent boards. This would challenge the Fed’s current structure.
— new from The Bulwark
