The Journal. – “The Federal Reserve Under Siege”

Date: August 26, 2025
Hosts: Jessica Mendoza & Matt Grossman
Podcast: A co-production of The Wall Street Journal & Spotify Studios

Episode Overview

This episode explores the escalating confrontation between President Donald Trump and the U.S. Federal Reserve, focusing on Trump’s surprising move to fire Fed Governor Lisa Cook. The hosts discuss the unprecedented nature of these events, what’s at stake for the independence of America’s central bank, and the potential future of U.S. monetary policy.

Key Discussion Points & Insights

1. Trump’s Unprecedented Move: Firing a Fed Governor

• At 8:00 p.m. in Washington D.C., Trump announced via social media a letter firing Lisa Cook, a member of the Fed’s Board of Governors ([00:05–00:29]).
• This move breaks with over a century of tradition; no president has ever attempted to fire a Fed Chair or a Governor before ([01:24–01:36]).
• Quote:

  “In all those years, a president has never tried to fire the chair of the Federal Reserve or, or any of its governors. And it really puts us into uncharted territory.”
  — Matt Grossman ([01:24])

Why This Matters

• The Fed’s independence is a cornerstone of stable economic policy. The friction raises questions about whether the central bank can remain insulated from political interference ([01:40–01:55]).
• Quote:

  “It really raises the question of whether this powerful and absolutely central economic regulator... is going to remain independent.”
  — Matt Grossman ([01:40])

2. Background: The Role of the Fed & Lisa Cook

• Lisa Cook: Academic economist, first Black woman appointed as a Fed governor, nominated by President Biden in 2022 ([04:02–04:24]).
• Board of Governors: Washington-based decision-makers, including the Fed Chair, who set interest rates to balance economic growth and inflation ([04:39–05:17]).
• Interest rate decisions affect everything from mortgages to business loans and overall economic activity ([05:17–06:05]).
  • Low rates spur growth but risk fueling inflation.
  • Raising rates can cool inflation, but may slow the economy.

Recent Policy Context

• Under Biden, the Fed fought inflation by raising rates; inflation cooled, and recently cuts began. Trump now wants rates lowered more aggressively ([06:05–06:30], [06:30–07:01]).
• Trump seeks alignment between Fed policy and his economic agenda.

3. Trump’s Pressure Campaign on the Fed

• Trump has been critical of Fed Chair Jerome Powell and the Fed’s rate decisions ([07:01–07:49]).
• He also spotlighted expensive Fed building renovations, using this as ammo to critique Powell ([07:49–08:40]).
  • Quote:

    “In July, he became really interested in a construction project... President Trump seized on this project as an example of mismanagement.”
    — Matt Grossman ([07:49])

4. The Accusation Against Lisa Cook

• Trump’s focus shifted to Lisa Cook after a Trump-allied official, Bill Pulte (head of the FHFA), alleged mortgage fraud against her on social media ([08:40–09:16]).

  • Accusation: Cook, in 2021, claimed two different properties in two states as primary residences to gain better mortgage rates.
  • Evidence is scant; Cook’s signature appears in shared images, but little else backs up the claim.

• This set off a chain involving the DOJ and led Trump to declare Cook’s firing ([09:16–09:57]).

  • Quote:

    “We’ve now seen evidence that... she has committed what he alleges is mortgage fraud, and, and, you know, we’re going to dismiss her over that.”
    — Matt Grossman ([09:16])

Cook’s Response

• Cook states the application predated her Fed service and is hiring legal representation, asserting Trump lacks authority to fire her ([09:57]).
• The Fed itself says governors can only be removed “for cause” and commits to following court rulings.

5. What’s at Stake: The Future of the Fed’s Independence

• Removing Cook would let Trump further reshape the Board toward his preferred policies ([09:57–11:39]).
• Already, with another Biden appointee’s recent resignation and a new Trump nominee pending, Trump could soon have significant influence ([11:39–12:16]).
• The Fed Chair term is up for renewal in eight months—Trump could pick Powell’s successor ([12:16–12:45]).
  • Quote:

    “It would be a really seismic shift in the makeup of the board, especially because in about eight months from now, the President’s going to have the chance to pick Jerome Powell’s successor as Fed Chair.”
    — Matt Grossman ([12:18])

6. Powell’s Bind: Policy Amid Political Pressure

• Upcoming Fed decision on rates looms large; Powell recently hinted at a possible cut ([12:45–13:08]).
• With Trump’s public pressure, Powell must try to demonstrate independence, making decisions for economic—not political—reasons ([13:08–13:39]).
  • Quote:

    “It sort of makes it incumbent upon him to make what he sees as the most rational independent calls that he can. Not because they’re the ones the President wants... but because they’re in the best interest of the economy.”
    — Matt Grossman ([13:10])

7. The Core Conflict: Politicization of the Fed

• The Fed’s credibility relies on being above the political fray—presidents have always wanted low rates, but the recent escalation is unprecedented ([13:39–14:42]).

  • Quote:

    “It’s a new paradigm for the Fed... It really degrades the trust that people have in the institution to be above that short term political fray.”
    — Matt Grossman ([14:55])

• If the White House dominates the Fed, the central bank’s ability to act independently could be quickly undermined.

Notable Quotes & Memorable Moments

• On Unprecedented Territory:

  “In all those years, a president has never tried to fire the chair of the Federal Reserve or, or any of its governors.”
  — Matt Grossman ([01:24])

• On Political Pressure:

  “It really raises the question of whether this powerful and absolutely central economic regulator... is going to remain independent.”
  — Matt Grossman ([01:40])

• On Powell's Dilemma:

  “It really puts Powell in a bind because everyone knows he's under this immense pressure from the White House.”
  — Matt Grossman ([13:10])

• On the Fed’s Core Role:

  “Striking a balance between those two is really the Fed’s mission.”
  — Matt Grossman ([05:17])

• Summary Warning:

  “If this is an institution that comes under the sway of the White House, that really has the potential to, to degrade very quickly.”
  — Matt Grossman ([14:55])

Important Timestamps

• 00:05 — Trump’s letter firing Lisa Cook
• 01:24 — Historical context: no president has fired a Fed Governor or Chair
• 06:05 — How and why the Fed has made unpopular decisions
• 08:40 — Emergence of allegations against Lisa Cook
• 09:57 — Cook’s legal response and the Fed’s statement on removal
• 11:39 — Potential for Trump to appoint more governors, shift Board’s makeup
• 12:45 — Upcoming Fed rate decision and Powell’s position
• 13:08 — Powell’s statement under pressure
• 14:55 — Matt Grossman on the threat to the Fed’s credibility

Tone & Style

The discussion is urgent, analytical, and steeped in the gravity of the ongoing political battle. The hosts maintain a measured, explanatory style that foregrounds both economic facts and their historical and political context.

Conclusion

This episode lays bare the stakes of Trump’s unprecedented actions regarding the Federal Reserve: the future independence of the central bank, the possibility of a political realignment at the Fed, and the risks to economic stability posed by undermining public trust in monetary policy. Whether Lisa Cook’s removal stands—and who may lead the Fed next—has profound implications for both markets and the American public.