Lev Menand on Trump's Attempt to Fire the Fed's Lisa Cook
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What is the background and why is this episode labeled an emergency?
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Bloomberg Audio Studios Podcasts Radio News.
Hello and welcome to another episode of the Ovlots Podcast. I'm Tracy Alloway.
And I'm Joe Weisenthal.
Joe, another day, another emergency episode.
I mean, we're back to emergency episodes, and this is obviously one of the big ones.
Yeah, so we are recording this on August twenty sixth, and we had news overnight that President Donald Trump intends to fire Lisa Cook from the Federal Reserve Board. Obviously, this feeds right into the debate over central bank independence and what the president actually has a right to do when it comes to hiring and firing. And uh the market reaction this morning gold up a bit. The dollar down. But what's really interesting is we have yields at the long end of the treasury market picking up, which would suggest there's More of a risk premium being built into that market.
No, totally. The concerns over Fed independence sort of cast a whole shadow of the recent Jackson Hole event. And of course, okay, so we're recording this August 26th. This morning, we put out an episode with Adam Posen, which was sort of about this surreal experience there where everybody knew that the threats to central bank independence were the number one story in monetary policy, and yet no one was really talking about. about it, maybe people are trying to lay low, trying to act business as usual, and then we get this. And so what was something that maybe people hope to imagine away or sort of not, you know, look in the other direction is now right here.
Well, we also had Trump tweeting that he wanted to fire Lisa Cook while Powell was giving his speech, which definitely underscores The tone of Jackson Hole recently. Okay, so there's clearly a lot to talk about, including whether or not Trump can actually do this from a legal perspective. And I'm glad to say we have the perfect guest, someone we have spoken to before on this exact topic of central bank independence. We're gonna be speaking with Lev Menand, professor at Columbia Law School, and also the author of The Fed Unbound. Lev, thanks so much for coming on the show again.
Thanks for having me back.
So I'm gonna start with a very simple question. Is there any precedent in history for a president firing someone from the Federal Reserve Board in this way?
No, there have been no firings of members of the Fed board by the president since the Fed Board was first created by Congress in nineteen thirteen and there haven't been any attempts by presidents to remove any officers of the United States for cause in over a century. And so we're in uncharted waters here in a number of different respects.
We're gonna get into the ostensible reasons for the firing, obviously, but as lawyers What does four cause mean?
So for cause. One of the legal questions here is what constitutes cause under the statute. And in federal law, in independent agency law, usually Congress specifies the causes. And there are three common ones: inefficiency, neglect of duty, and malfeasance in office. These are the classic causes. The Federal Reserve Act is unusual for not specifying specific causes but saying
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Chapters
6 chapters
1
What is the background and why is this episode labeled an emergency?
0:00–6:23
2
What did President Trump announce on August 25 about Fed Governor Lisa Cook?
6:23–7:41
3
How does the Trump administration justify firing Cook “for cause”?
7:41–17:46
4
Is there any historical precedent for a president removing a Fed board member?
17:46–20:48
5
What does “for cause” actually mean under the Federal Reserve Act?
20:48–30:20
6
What are the specific mortgage‑fraud allegations against Lisa Cook?
30:20–30:43
Speakers
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