Jerome Powell and the Future of Fed Independence

Summary

Planet Money: Jerome Powell and the Future of Fed Independence

Date: May 15, 2026
Hosts: Kenny Malone & Erica Barris

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Episode Overview

This episode explores the tenure of Jerome Powell as Federal Reserve Chair, focusing on the challenges to the independence of the Fed, particularly under presidential pressure during the Trump administration. Through historical context, expert interviews, and recent events—including an unprecedented criminal investigation into Powell—the episode examines what Fed independence means, why it matters, and what the future may hold as a new Trump-nominated Fed chair takes office.

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Key Discussion Points and Insights

1. Jerome Powell's Legacy and Fed Independence

[00:01–03:41]

• The Powell era faced crises: COVID-19 pandemic, spiking and falling inflation, wars, new tariffs, and unprecedented presidential pressure.
• Powell became notable as a target of Trump’s criticisms and a subsequent criminal investigation.
• The Fed raising rates in 2018 despite Trump’s vocal opposition marked a new era of visible presidential meddling.
  • "At the time, we had simply never seen anything like this before. For most Americans lives, this kind of presidential meddling was unprecedented." — Erica Barris [01:30]

2. Historical Cases: The Hall of Infamy

[04:01–09:25]

• LBJ vs. McChesney Martin (1960s):
  Johnson tried to intimidate Fed Chair William McChesney Martin into lowering rates; Martin stood firm.
  • "If you want one single moment when the Federal Reserve defined its independence, that's it." — Bob Bremner [07:27]
• Nixon vs. Arthur Burns (1970s):
  Nixon pressured Burns who capitulated, resulting in runaway 1970s inflation.
  • "Burns...wound up creating one of the worst inflationary experiences in the last hundred years." — Burton Abrams [09:12]

3. Why Independence Matters

[09:44–10:17]

• Central banks free from political interference—especially short-term election-driven policies—maintain lower inflation and stronger economies.
  • "Developed nations that let their central banks act independently tend to have considerably lower inflation overall." — Erica Barris [10:06]

4. Powell Compared to History: Expert Takes

[10:32–11:54]

• Professor Burton Abrams, inflation historian, asserts Powell behaved more like Martin (stood up to the President) than Burns.
  • "He actually stood up to Trump when Trump was demanding lower interest rates...he showed strong independence." — Burton Abrams [11:12]
• Mixed views on Powell’s policy performance but agreement that his independence was clear.

5. A New Historic Moment: Criminal Investigation

[13:43–19:00]

• Former Fed Vice Chair Lael Brainard, who served with Powell, says his facing a DOJ criminal investigation over testimony is unprecedented.
• Powell released a video stating he was being investigated as a consequence of not following presidential preferences on rates.
  • "The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President." — Jerome Powell (video statement) [18:56]
• Brainard likened this to Martin’s confrontation with LBJ, but even more dramatic.

6. Inside the Fed During Pressure: Lael Brainard’s View

[13:54–17:31]

• Presidents naturally care about Fed policy, but the Board’s approach is to stick to the dual mandate and clearly communicate decisions.
  • "The approach is to simply carry on and just keep communicating with the public. Here is my objective that Congress gave me..." — Lael Brainard [16:24]
• Transparency and explaining data-driven decisions are key defense mechanisms.

7. The Future: Signs to Watch for Fed Independence

[20:17–26:36]

a. Congressional Defenses

• Recent Senate refusal to confirm Trump’s new Fed chair until DOJ dropped the Powell investigation signals bipartisan defense of Fed independence.

  • "Congress continues to defend the independence of the Fed on a bipartisan basis against presidents, even when they are president of your own party." — Lael Brainard [22:11]

• Ambiguity remains around what “for cause” means in firing Fed Board members. New legislation could clarify and protect independence.

  • "Congress could pass legislation making clear what for cause means." — Lael Brainard [22:39]

b. The Judicial Branch & Lisa Cook Case

• Trump’s attempt to fire Fed board member Lisa Cook for alleged mortgage fraud is currently before the Supreme Court.
• The outcome could set a precedent about presidential power over the Fed.
  • "If the President can fire board members at will, there's not really an independent Fed anymore." — Lael Brainard [24:06]

c. Dissent Within the Fed

• Recent, regular dissent—such as Stephen Moran’s repeated votes for lower rates—marks a shift.
  • Brainard sees increased dissent as healthy and possibly a new norm, similar to other major central banks.
  • "Dissent is very healthy...there are other central banks where dissent is the norm, like the Bank of England." — Lael Brainard [25:22, 26:36]

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Notable Quotes and Memorable Moments

• "Jerome Powell was not an Arthur Burns in the end." — Kenny Malone [11:42]
• "I think it is the most striking moment where the chair of the Federal Reserve found necessary to speak to the American people to note that he saw this as a real threat to the independence of the Federal Reserve." — Lael Brainard [19:09]
• "So maybe this was the norm all along, and that 40 years of peace we just lived through, that will go down in history as the exception." — Kenny Malone [27:30]

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Important Timestamps

| Timestamp | Segment/Topic | |-----------|-------------------------------------------------------------| | 00:01 | Powell’s last day / Opening setup | | 01:46 | Presidential pressure and why Fed independence matters | | 05:03 | LBJ attempts to pressure McChesney Martin | | 07:27 | Defining moment for Fed independence | | 08:09 | Nixon tapes—Arthur Burns pressured, caves | | 10:32 | Powell’s behavior compared to Martin & Burns | | 13:43 | Lael Brainard joins the discussion | | 16:24 | Inside strategy for handling presidential pressure | | 18:56 | Powell’s public video about DOJ investigation | | 21:01 | Optimism about new chair: Congress as a check | | 22:39 | Legislation defining “for cause” in board member firing | | 23:12 | Lisa Cook Supreme Court case | | 24:06 | How Supreme Court decision could reshape Fed independence | | 25:22 | Discussion: Is dissent a worrying sign? | | 27:30 | Reflection: Is presidential pressure on the Fed the norm? |

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Episode Tone and Flow

The episode is factual but leavened with Planet Money’s trademark humor and accessibility. The hosts use history, expert voices, and present-day drama to underscore the stakes, with moments of both optimism and caution about the Fed’s future.

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Conclusion

Planet Money presents Jerome Powell’s tenure as a defining chapter—possibly the third great case—of the ongoing story of Fed independence. While immediate threats have been circumnavigated thanks to checks from Congress and the courts, the future will be shaped by how new leaders, lawmakers, and the judiciary adapt and respond to growing political pressures.

For anyone concerned about the future of the US economy, the independence of the Fed remains an issue to watch closely.

Transcript

[Erica Barris]

This is Planet Money from npr. Today is Jerome Powell's last day as Fed chair. At least he'll still be on the Fed board that he's allowed to do until 2028.

[Kenny Malone]

Now some quick hits from what has been a pretty eventful tenure. The Powell Fed faced a once in a century pandemic.

[Erica Barris]

Oversaw the economy as inflation spiked to 9.1% and then went back down to nearly 2%.

[Kenny Malone]

And now, as inflation has started to go back up, as the US has gone to war and continues to try and levy the most comprehensive tariffs since the 1940s.

[Erica Barris]

But beyond all that, perhaps Powell will be most remembered as a target of angry tweets, speeches, ultimately a criminal investigation by President Trump and his administration, the very President who nominated him in the first place.

[Kenny Malone]

And I remember the moment we at Planet Money really started paying attention to the Trump Powell tensions. It happened about 10 months after Powell was appointed. Back in 2018, the Federal Reserve had raised rates a few times. Inflation was still sort of uncomfortably high. And the day before the upcoming Fed meeting, President Trump tweets that it is, quote, incredible that, quote, the Fed is even considering yet another interest rate hike. And then tweeted again the next day that the Fed better not, quote, make yet another mistake.

[Erica Barris]

Later that day, the Fed did do another interest rate hike. They seemed to ignore the President's tweets, but at the time, we had simply never seen anything like this before. For most Americans lives, this kind of presidential meddling was unprecedented because it is

[Kenny Malone]

generally understood to be quite bad. The President of the United States to strong arm the chair of the Federal Reserve because it's impossibly important for our central bank to not worry about the short term political whims. The Fed will often need to do unpopular things that politicians don't like, such as raising interest rates and slowing down the economy before inflation, you know, inflates.

[Erica Barris]

This idea is known as Fed Independence. And those tweets kicked off a semi regular unofficial series at Planet Money about Fed independence. We even tried to create a Fed Independence holiday. We even had a special guest so special endorse that holiday.

[Kenny Malone]

Big special.

[Bob Bremner]

This is Janet Yellen, former Chair of the Board of Governors of the Federal Reserve. I want to wish everybody a very happy Fed Independence Day.

[Kenny Malone]

Yell it from the rooftops, Janet. Get the Hallmark cards out. That hasn't really taken off, but that's okay because generally speaking, the kinds of Fed independence episodes that we have made over the last eight years, they looked at the famous case studies of other times a US President tried to pressure their Fed chair.

[Erica Barris]

These are history stories, because history stories are what you look to when you're in the middle of something, when you don't know how your own story is going to end.

[Kenny Malone]

Well, as of today, folks, we finally do know how our story ends, or at least Jerome Powell's. And honestly, that story was wilder and more alarming than we could have ever imagined back in 2018. Hello, and welcome to Planet Money. I'm Kenny Malone.

[Erica Barris]

And I'm Erica Barris. Today on the show, where does the Jerome Powell story fit into the sweep of history? We'll hear from someone who was on the Fed board when Powell became chair and when Trump started to pressure Powell.

[Kenny Malone]

Plus, we will learn what signs to watch for to tell whether Fed independence is crumbling or standing strong as the new Trump nominated Fed chair takes office.

[Erica Barris]

Up until now, there have only really been two cautionary tales in Fed independence history.

[Kenny Malone]

Right. Let's call them two entries in. I want to say Fed Independence hall of Fame, but that's not quite right. I guess it's the Fed hall of Infamy. Yes.

[Erica Barris]

Yeah, that sounds right.

[Kenny Malone]

Two entries. And each of them teach us what happens when a president starts to pressure a Fed chair and just how bad it can get.

[Erica Barris]

The first of those moments.

[Bob Bremner]

Bill, I just want to thank you for your most thoughtful and generous letter, and I appreciate it so much.

[Erica Barris]

This is President Lyndon B. Johnson. Thank you. Days after taking office, calling to introduce himself to then Fed chair William Bill McChesney.

[Kenny Malone]

Martin and Johnson was just calling to say hi, you know, to say, like, you're the expert, Bill. I'm just here to listen to you about monetary policy.

[Bob Bremner]

Well, you just assume that you're starting with someone that doesn't know much about your shop, and then you start to tell me what I ought to know about it. Well, I certainly will help in every way that I can, Mr. President. I'm working on.

[Kenny Malone]

So fun, so charming, so folksy.

[Erica Barris]

Yeah, so nice. McChesney Martin was fed Chair in a hugely important time for Fed independence. In fact, Fed independence was a brand new experiment for the United States.

[Kenny Malone]

Right. So in the olden days, the Fed kind of did take orders from the President because the Fed took orders from treasury, which took orders from the President. And it was a classic mess. After World War II, inflation started spiraling. The President Truman insisted the Fed not raise rates. Inflation hit 21%. The Fed was like, no, no, we cannot let this happen again.

[Erica Barris]

And on March 4, 1951, fed Independence Day, the Treasury and Fed issued a totally unassuming Little memo basically saying, henceforth the treasury and therefore the President is. Is leaving the Fed alone.

[Kenny Malone]

We're out. We're letting you be. But this was not like a law or anything. It was just really a handshake deal that worked fine honestly, until Lyndon B. Johnson came into office.

[Bob Bremner]

Well, Lyndon Johnson had a reputation for being a manipulator. He remembered slights, he exchanged favors, and he played them like fiddles.

[Erica Barris]

That is Bob Bremner, who wrote the biography of McChesney Martin.

[Kenny Malone]

And within two years, Johnson is really mad at McChesney Martin, his fed chair, for raising interest rates. Bob says that Johnson forces McChesney Martin to fly down to Johnson's ranch in Texas, calls him into the office, and

[Bob Bremner]

Johnson is just fit to be tied.

[Kenny Malone]

Yeah, Johnson real mad.

[Erica Barris]

He was hot. Now, we don't know exactly what was said in that office, but there is

[Bob Bremner]

a reference to the fact that Johnson was so angry that he pushed Martin against the wall.

[Kenny Malone]

The President of the United States.

[Bob Bremner]

Yes.

[Kenny Malone]

Laid hands on his Fed chair.

[Bob Bremner]

Yes.

[Kenny Malone]

And what does Martin do?

[Bob Bremner]

Well, Martin says, Mr. President, I do have the very strong conviction that this is one of those few occasions where the Federal Reserve decision has to be final.

[Erica Barris]

And this is a huge moment. McChesney Martin stands up to LBJ and says, no, this little memo from 1951 is more than a handshake. The Fed is not going to be bullied into doing what the President wants.

[Lael Brainard]

Yeah.

[Bob Bremner]

I mean, if you want one single moment when the Federal Reserve defined its independence, that's it.

[Kenny Malone]

And so William McChesney Martin is the good cautionary tale. The bad cautionary tale. Well, that would be the chairship of one Arthur Burns.

[Burton Abrams]

Arthur Burns had a reputation of being an extremely cautious monetary economist.

[Erica Barris]

That is Professor Burton Abrams. He spent decades studying monetary policy and sort of uncovered why the Burns chairship was such a mess by digging through the Nixon tapes.

[Kenny Malone]

The Nixon tapes.

[Bob Bremner]

How are you? Hi. How are you? Fine. Did you have a good trip? Oh, yeah. I just got back from Chicago. I know.

[Kenny Malone]

This is Richard Nixon talking to Arthur Burns. And in the Nixon tapes, there are some. How do we say, Rough phone calls for Fed independence.

[Erica Barris]

Yeah, Nixon was strong, arming Burns to juice the economy. Leading up to Nixon's reelection, there were rumors going around at the time of the White House functionally taking over the Fed.

[Kenny Malone]

And it sure seems like Burns caved in the face of these threats and rumors. And in the tapes, you'll hear Arthur Burns sound like a. Like a lap dog bringing Nixon the policies he wants.

[Bob Bremner]

Look, I wanted you to know we reduced the discount rate today. Oh yeah, yeah, yeah. Good, good. What is it now? Four, four and a half. We got it down to four and a half percent. Four and a half, yeah.

[Kenny Malone]

Oh, it's a bad look, Erica.

[Erica Barris]

A little wild.

[Kenny Malone]

It's a lot.

[Erica Barris]

It's a lot.

[Kenny Malone]

Ultimately, economist Burton Abrams says all of this tanked Arthur Burns reputation.

[Burton Abrams]

Yep. Arthur Burns was a very well respected economist and he wound up creating one of the worst inflationary experiences in the last hundred years.

[Erica Barris]

Yeah, eventually, in the early 80s, inflation peaked at G, get this, 14.6%.

[Kenny Malone]

And it certainly did seem that US presidents after that learned their lesson. For decades, we simply did not see a sitting president actively pressuring their Fed chair.

[Erica Barris]

So it is not a particularly controversial opinion that Fed independence is hugely important.

[Kenny Malone]

There's a whole economic literature on what's called the inflation bias. And a big part of that is the idea that governments, when given the choice, will tend towards forcing their central banks into things that cause inflation, keeping interest rates low, printing too much money, etc.

[Erica Barris]

And so governments that take away their own choice tend to do much better. Developed nations that let their central banks act independently tend to have considerably lower inflation overall.

[Kenny Malone]

And this is why back in 2018, just a handful of tweets from President Trump talent is Fed to, you know, not make another mistake. Again, this set off alarm bells for us at Planet Money. Also, I guess for Burton Abrams.

[Burton Abrams]

I confess I've voted for Donald Trump, but he's not a very good monetary policy manipulator. So I, I would wish he would

[Erica Barris]

stay out of that because Burton Abrams is the expert on the worst case case scenario, the Arthur Burns scenario, which was why he was also our first call to discuss how Fed Chair Jerome Powell ultimately handled Trump's pressure.

[Kenny Malone]

My question is for you, for someone who studied these important historical case studies, was Jerome Powell ultimately more like McChesney Martin, more like Burns?

[Burton Abrams]

Well, I would say it was more like William McChesney Martin. He actually stood up to Trump when Trump was demanding lower interest rates. And so he, he showed, I think, strong independence from that. That's not to say that I think he did a good job overall, but I would say that he seemed to demonstrate that the Fed needed independence.

[Kenny Malone]

Burton says on Fed independence. Yeah, Jerome Powell was not an Arthur Burns in the end, you know, as for overall performance as a Fed chair, well, you're going to find quite the spread of feelings about that.

[Erica Barris]

Right. Some people will argue Powell's Fed managed the impossible. They soft landed the economy after inflation spiked during COVID they got inflation down and somehow kept unemployment low.

[Kenny Malone]

On the other side, there are people like Burton who feel like inflation shouldn't have spiked so badly during COVID to begin with, that the Fed did things that made it worse, including, and this is one of Burton's big issues, a bunch of quantitative easing where the Fed bought up things like mortgage backed securities, introduced even more money into the system, and made buying a home even more difficult for lots of people. So to summarize, you ultimately feel like Powell created the independence to run the central bank the way that he wanted to run the central bank. You don't agree with how he ran the central bank, but you feel like the independence was there?

[Burton Abrams]

I think so.

[Kenny Malone]

The truth is we're not really in a place to grade Powell's Fed today, because that part of the story that will often take years to unfold.

[Erica Barris]

But we can, on his final day as Fed chair, finish etching the Jerome Powell entry into the Fed Independence hall of Infamy. Because what absolutely seems to be true is in 50 years, if an economics podcaster went looking for extraordinary moments in Fed independence history, there are now three. McChesney Martin, Arthur Burns, and Jerome Powell.

[Kenny Malone]

And Powell's big moment, well, that is arguably even more dramatic than getting shoved against a wall by a president. After the break.

[Erica Barris]

Okay, there was one final person we wanted to talk to about Powell's term as Fed chair.

[Kenny Malone]

Was Jay Powell More a McChesney Barton or more an Arthur Burns?

[Lael Brainard]

Well, I would say that Trump's second term has really put Jerome Powell in a category of his own, because the actions that have been taken have been really unprecedented.

[Erica Barris]

This is Lael Brainard, former member of the Fed Board of Governors.

[Kenny Malone]

Now, we've talked a lot about the Fed chair, but, you know, the Fed is a group, really. There's a board of seven people, including the Fed chair, plus five heads of regional Feds. And what really happens is those 12 people go into a room, look at data, debate the direction of the economy, and then set monetary policy.

[Erica Barris]

Lael was one of those seven board members. She was nominated by Obama, and she was still there when Trump appointed Powell.

[Lael Brainard]

So I was on the board for about nine years, and I was there during all of the first Trump term.

[Kenny Malone]

Yes. So you were there during the time we started paying attention to this because there were these little blips that seemed unusual. Do you remember internally feeling those things crop up as odd?

[Lael Brainard]

So it was very clear that during the first term, President Trump wanted US Interest rates to be lowered by the Federal Reserve and he was very vocal, very critical, and very personal.

[Kenny Malone]

For this last chapter of our episode, we wanted to talk to Lael for a couple of reasons. Number one, there are simply not very many people who can tell you what it's like inside the Fed when the President starts to pressure the Fed.

[Erica Barris]

And number two, to ask what she'll be watching going forward, signs she'll be looking for that Fed independence is holding strong or starting to crumble.

[Kenny Malone]

But let's start inside the Fed. Lael was there when Trump first started to tweet the stuff that we at Planet Money noticed. You know how it was incredible, the Fed was considering another rate hike and how the Fed better not make another mistake. Is there a policy in place where it's like, if the President tweets, don't show it to me. I don't wanna see it. I don't want it to influence my decision? Is there anything like that in place back then?

[Lael Brainard]

No, there's no policy. I think it is not unusual. And it's highly understandable why presidents might get frustrated with the Federal Reserve when their reelection really hinges on how consumers are feeling about the economy.

[Kenny Malone]

So when that tweet goes out, you don't say like, la, la, la. I'm not listening. I'm not seeing this. That's not the approach.

[Lael Brainard]

The approach is to simply carry on and just keep communicating with the public. Here is my objective that Congress gave me. Keep inflation low and stable, 2%, keep the labor market robust, full employment, and here's the data and how I'm making the decision.

[Erica Barris]

Yeah, that's the Fed's dual mandate or dual objective, keeping inflation and unemployment low. And Lael says, as the President made it more and more clear in public that he wanted the Fed to do specific things, the Fed felt like it was more and more important to just show their work when they made decisions.

[Kenny Malone]

Yeah, you know, the Fed is speaking to all of these audiences, the public, financial markets, Congress. And so ignoring the President and simply saying clearer than ever why they are making the choices that they are making, that was their way of showing all of those audiences that they were setting policy based on facts and data and not executive pressure.

[Erica Barris]

And really, Lael says that was a general approach during the first Trump term, and it seemed to work.

[Kenny Malone]

Under President Joe Biden, Lael actually became Powell's vice chair, then left that role to head up Biden's National Economic Council. She. She moved on from being inside the Fed.

[Erica Barris]

She was, of course, still paying attention to what her old Fed colleagues were up to. Just from the outside. Which was why she, like the rest of us, had no inside information leading up to January 11th of this year.

[Lael Brainard]

I think we all learned about it in the same way when we saw that extraordinary statement on the part of Chair Powell.

[Burton Abrams]

Good evening.

[Kenny Malone]

On Friday, the Department of justice served the Federal Reserve with grand jury subpoenas.

[Erica Barris]

This is from a video released by the Fed. It's just Jerome Powell addressing the camera, dropping an absolute bomb that he was being investigated by the DOJ related to testimony he gave about cost overruns on a Fed construction project.

[Kenny Malone]

And of all the super unusual things about this video, what still stands out to me is how Jerome Powell, a man famous for calmly Fed speaking his way through giant announcements, how he is shockingly straightforward about what he thinks is going on in this investigation. The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of

[Bob Bremner]

what will serve the public, rather than

[Burton Abrams]

following the preferences of the President.

[Erica Barris]

For Lael, when we look back at the Powell era, this is the moment. It's Powell's version of getting pushed against the wall by lbj.

[Lael Brainard]

I think it is the most striking moment where the chair of the Federal Reserve found necessary to speak to the American people to note that he saw this as a real threat to the independence of the Federal Reserve.

[Kenny Malone]

Have you talked to Chairman Powell at all during this extreme ramp up in pressure?

[Lael Brainard]

I have not. I believe it's important to, as somebody who was formerly at the Federal Reserve, you know, to kind of give them all the space they need while they're navigating through a very complicated situation.

[Kenny Malone]

Yes, complicated situation is perhaps an understatement. A criminal investigation into a Fed chair is so beyond any of the historic case studies in Fed independence. And personally, it has not made me particularly optimistic about the future of this hugely important ideal. That's a big reason we wanted to talk to Lael, to hear what signs she is watching for whether Fed independence is crumbling or holding going forward.

[Erica Barris]

So let's start with this. The incoming Fed chair nominated by Trump is named Kevin Warsh. Like Lael, Kevin Warsh served on the Fed board. He was nominated by George W. Bush back in 2006.

[Kenny Malone]

Now, Kevin and Lael did not overlap, but it does seem as if Warsh's time on the board means something.

[Lael Brainard]

I think everybody who serves on the Federal Reserve Board takes very seriously this mandate to really stay focused on the dual objectives that Congress gives the Fed and is not swayed by political judgments. And so I would certainly give the incoming chair the benefit of the doubt.

[Kenny Malone]

Are you optimistic about the term of the incoming chair?

[Lael Brainard]

I am optimistic in the sense that it was extremely important that we saw the checks and balances reassert themselves.

[Kenny Malone]

Ah, yes, the checks and balances reasserting themselves. A few things have happened in the last year that, that are making LAEL optimistic and are worth going through one by one.

[Erica Barris]

All right, cause for optimism. Number one, Congress not messing around when it comes to Fed independence.

[Lael Brainard]

What we've seen finally is that the Senate, which is responsible for confirming nominees to the Federal Reserve, has finally stood up and said, enough. We're not going to confirm the new chair until this criminal investigation is dropped.

[Kenny Malone]

The criminal investigation of Jerome Powell, Republican

[Erica Barris]

Senator Thom Tillis specifically led this charge and indeed the DOJ announced they were closing the investigation.

[Kenny Malone]

I mean, they did say they'd keep looking and would open a new investigation if they found anything wrong. But yes, technically they have closed the Powell investigation because at least one Republican lawmaker drew a line.

[Lael Brainard]

So I'll be watching how much Congress continues to defend the independence of the Fed on a bipartisan basis against presidents, even when they are president of your own party. That's really important.

[Erica Barris]

Lail says there's more Congress could do. The 1913 law that created the Fed says a president can fire a Fed board member, but only for cause. It does not, however, define cause.

[Lael Brainard]

Congress could pass legislation making clear what for cause means.

[Kenny Malone]

Being corrupt, being negligent in your job responsibilities, just something more specific than just for cause.

[Lael Brainard]

That kind of clarification would be extremely

[Erica Barris]

helpful because this has become an issue under Trump.

[Kenny Malone]

Yeah. Last year Trump attempted to fire the Biden nominated Fed board member Lisa Cook for alleged mortgage fraud, which to many people seemed like an obviously spun up excuse for a political attack on Cook.

[Erica Barris]

Cook sued. And this is another thing Lael is watching for, how the judicial branch handles the Cook case.

[Kenny Malone]

So the lower courts have kept Cook on the Fed board, but. But the case is now before the Supreme Court.

[Lael Brainard]

I think it's not yet clear where the Supreme Court is headed on this, but there is plenty of opportunity for the Supreme Court to harden up in a way that strengthens the independence of the Federal Reserve, if that's what they decide.

[Erica Barris]

The Supreme Court has already heard oral arguments for the case and listening to the Justice's questions made LA optimistic. But this is a high stakes decision to watch for because if the President can fire board members at will, Lael says there's not really an independent Fed anymore.

[Lael Brainard]

Yes, I think we should all be extremely concerned if the bar is lowered for the Federal Reserve, for firing members of the board of the Federal Reserve, the way that the Supreme Court has lowered the bar for other independent agencies, that would fundamentally alter the ability of the Federal Reserve to control inflation.

[Kenny Malone]

And finally, we wanted to ask Lael about something that we've noticed as a possible sign of fractured independence. That would be dissent on the Fed board.

[Erica Barris]

Right. Lately, a strange thing has been happening. When the Fed meets, they'll announce their decision. But basically every time there is this one board member Trump nominated, Stephen Moran, who openly dissents. Basically, he says, I disagree with this decision. Rates should be lowered.

[Kenny Malone]

Now, people including Lael, have said, well, this is probably the new norm. We may hear more dissenting voices from all over the political spectrum going forward, which would be pretty unheard of from our Fed. The Fed, in recent history at least, has tended to speak with one steadfast voice. And we asked Lael about this. So should people be worried about that?

[Lael Brainard]

No, I think that dissent is very healthy. You're right that for many years, certainly when I was on the Federal Reserve Board, dissent was rare on monetary policy. And there was a real effort on the part of all members of the Monetary Policy Committee to come together in support of the chair.

[Erica Barris]

She even told us a story about this from when she was on the board back in 2015.

[Kenny Malone]

Yeah. And basically the situation was Lael did not think it was time to raise rates. Some of her Fed colleagues disagreed. And the way the Fed worked back then, basically the way it has worked for the last few decades, is the board members, the regional heads, they went into their room, they talked it all out, said their piece, and eventually a decision was reached. They were going to raise rates.

[Lael Brainard]

I would not have done that if I had chosen independently. But for me, at that juncture, it was more important to support the chair and give the chair the ability to communicate clearly with the American public. Why now? What was the rationale here? Just because it makes it easier for the chair to explain.

[Kenny Malone]

It's a united voice.

[Lael Brainard]

It's a united voice.

[Kenny Malone]

It's a single message.

[Lael Brainard]

Absolutely. On the other hand, there are other central banks where dissent is the norm, like the bank of England. And I think over time, both the public and financial markets have come to absorb those dissents and understand what they mean. So I think that's probably where we're headed in the next maybe few years, but I don't know that for sure.

[Erica Barris]

So if, when you see stories about Descent, it might feel bad. But just remember, Lael says, not necessarily so.

[Kenny Malone]

You know, I Think generally reporting this episode has made me more optimistic about the future of Fed independence than I was. I don't know, Erica. Like a week ago with. With, may I say, one major exception. A real downer of an idea to end on, but I would like to, if that's okay.

[Erica Barris]

Okay, go for it.

[Kenny Malone]

All right. We'll put uplifting music at the end, so it'll be fine. Yeah. Okay. So, you know, back in 2018, when we started to look for examples of presidents pressuring their Fed chairs, it was really just McChesney, Martin and Burns. And, you know, when you go researching those cases, it's all black and white photos and scratchy phone calls. It all feels very distant. Like the idea of a president overstepping seemed so archaic and rare. But today, Jerome Powell, he is just the eighth Fed chair in the Fed Independence era, like after the Treasury Fed Accord. And so when you run those numbers, it maybe felt like presidents pressuring Fed chairs was rare. But Jerome Powell now makes three of eight Fed chairs to face historic pressure from a president when the president is supposed to leave the Fed alone. So maybe this was the norm all along, and that 40 years of peace we just lived through, that will go down in history as the exception. Today's episode was produced by Sam Yellowhorse Kessler. It was edited by Jess Jiang, Fact Checked by Sierra Juarez, and engineered by Sina Lofredo and Robert Rodriguez. Our executive producer is Alex Goldmark. I'm Kenny Malone.

[Erica Barris]

I'm Erica Barras. This is npr. Thanks for listening.