Trump allies double down on efforts to reshape Federal Reserve

Cook remains a target after the high court allowed her to stay in her job for now, as does former Chair Jerome Powell.

President Donald Trump and his allies are renewing a push to reshape the Federal Reserve after the Supreme Court this week blocked an effort to fire Governor Lisa Cook.

Top officials and outside allies are actively exploring ways to remove members of the Fed’s Board of Governors in Washington to clear the way for more of the president’s own picks, according to people familiar with the matter. Cook remains a target after the high court allowed her to stay in her job for now, as does former Chair Jerome Powell, said the people, who spoke on the condition of anonymity.

Although the Supreme Court’s ruling reinforced the Fed’s independence from the executive branch, some Fed watchers noted the narrowness of the decision and cautioned it doesn’t completely shield the central bank from future political attacks. Undeterred, Trump allies see the decision as providing a procedural roadmap for how to successfully push Cook out, and are redoubling their efforts to do so, according to people familiar with the matter.

Trump told CNBC on Thursday that the court’s ruling was based on procedure, not merit, and his administration would begin a process to remove her from the central bank.

“We’ll start the process and we’ll do perfect process and perfect procedure,” he said.

The administration also sees a vacancy atop the Atlanta Fed as another opportunity to exert influence over the central bank, with Treasury Secretary Scott Bessent tapping his network for potential candidates, the people said. The Atlanta Fed presidency is seen as a key role by Trump’s economic policy team because of the closely watched analysis it conducts on economic growth and other topics, they said.  

The Atlanta Fed president will also vote on interest rates in 2027. 

Trump ratcheted up scrutiny of the Fed after returning to office last year, frequently berating Powell for not lowering interest rates quickly enough. Trump publicly mused about firing the former chair and made clear that he would choose a successor more aligned with his economic thinking. His eventual pick, now Fed Chairman Kevin Warsh, appeared to echo Trump’s view that interest rates should be lower in the run-up to his nomination. 

But Fed rate cuts are looking less likely this year amid renewed inflationary pressures. About half of officials now think the Fed may need to hike rates this year, according to projections released in June. Several of the presidents of the Fed’s regional banks are among policymakers most anxious about the inflation outlook. 

White House spokesman Kush Desai did not comment directly on points raised in this story. 

“President Trump and Administration officials have all consistently said the same thing: everyone has confidence in Chairman Kevin Warsh and, despite temporary disruptions to energy markets, the Trump administration’s supply-side policies are cooling inflation to pave the way for interest rate cuts,” Desai said. The Treasury Department did not reply to a request for comment.

Powell Staying

Trump remains angry at Powell for staying on the Fed’s board after his tenure as chair expired, according to several people close to the president. Trump was particularly upset when Powell accepted a John F. Kennedy Profile in Courage Award in late May for his stewardship of the Fed and praised Congress for having wisely chosen “to insulate monetary policy decisions from political pressure.”

Kevin Hassett, director of the White House’s National Economic Council, publicly noted growing unease over Powell and dialed up criticisms this week.

“I’m concerned with Jay Powell staying,” he said on Fox Business on Wednesday. “There’s a majority of people over at the Fed that are not necessarily going to be voting because they’re patriotic, but rather because they want to get Trump — and we’re going to have to keep a close eye on that.”

Outgoing Fed chairs have typically departed the central bank at the end of their leadership terms, but Powell is holding onto his underlying role as a governor, which expires in 2028. Powell said he would keep a low profile as he stays on, but cited the administration’s ongoing legal pressures on the Fed in announcing he would remain. 

Powell made that decision after the Justice Department launched a criminal probe into his handling of a $2.5 billion renovation of the Fed’s Washington headquarters that has seen significant cost overruns. He characterized the investigation as a consequence of the Fed refusing to set interest rates according to Trump’s preferences. A Fed inspector general report on the renovation project is expected later this month.

While US Attorney for the District of Columbia Jeanine Pirro said in April she was dropping the inquiry, she said she would scrutinize the inspector general’s findings – making it clear the investigation could be reopened.

Whether by using the IG report or another method, Trump officials and his allies are hoping to find an opening to allow the White House to push Powell out, according to people familiar with the matter.

Cook Scrutiny

Cook, a Biden-era appointee, is also still a target. 

Trump took the unprecedented step last August of attempting to remove a Fed governor when he said he was firing Cook over mortgage-fraud allegations that she denies. The matter made its way to the Supreme Court after Cook sued to block the removal, and a majority on the high court said Monday that she can stay in the job while the underlying case plays out.

In his opinion, Chief Justice John Roberts said the court was issuing its decision on “narrow ground” because Trump failed to provide Cook procedures to properly dispute the allegations against her.

Almost immediately after the decision, Trump and allies signaled they intended to carry on with efforts to oust her. 

The Supreme Court stopped short of ruling on whether the allegations against Cook, if true, would constitute sufficient legal cause for firing her from the Fed. That means any potential subsequent attempts from Trump to fire her could again wind up being tested in the courts.

Atlanta Fed

The administration is also turning increasing attention to the 12 regional Fed banks, including the vacancy in Atlanta. Some Trump allies see the opening as an opportunity to install a pick ideologically aligned with the president, according to people familiar with the matter. 

Bessent and other key economic officials inside the administration are closely watching how the process to choose a new president is unfolding. 

Regional Fed presidents, who vote on interest-rate decisions on a rotating basis, are chosen by their local board of directors, made up of executives and business leaders from the region, excluding members of financial institutions. Candidates are then approved by the Fed’s board in Washington. 

The Atlanta Fed was far along in the search process in May, according to people familiar with the matter. However, once it appeared Warsh’s confirmation was imminent, Fed Vice Chair for Supervision Michelle Bowman and then-Governor Stephen Miran — both Trump appointees — urged officials to halt the process until Warsh was sworn in to give him some say in the selection. 

The selection process was recently re-started. Warsh is seeking candidates with leadership experience in the private sector, according to two people familiar with the matter. 

The Atlanta Fed job opened up after former president Raphael Bostic, who was frequently vocal about lingering inflation risks, stepped down in February, a move he announced last November.

Asked for comment, the Atlanta Fed repeated a statement it provided in June.

“We maintain our focus on selecting the best candidate to serve the Sixth District, while protecting the integrity of the process,” said Greg Haile, chair of the Atlanta Fed board of directors and presidential search committee. “We will provide relevant updates about this important leadership role when appropriate.”

This story was originally featured on Fortune.com