A legal dispute has started over President Donald Trump’s attempt to remove a sitting Federal Reserve governor, which could give him more influence over the central bank’s decisions on interest rates and financial oversight. Trump said at a recent Cabinet meeting, “We’ll have a majority very shortly. So that’ll be great,” referring to the seven-person Board of Governors.
Trump is seeking to appoint loyalists to the board and needs only one more seat for the balance of power to shift in his favor. This would give the president significant control over an institution designed to operate independently from the White House. The president could also gain leverage over the 12 regional banks within the Federal Reserve system, whose officials participate in policy decisions.
“With four on the board, the president and his administration can have a big influence,” said Gary Richardson, professor of economics at the University of California at Irvine. “It gives them ways to push.”
Trump has repeatedly urged the Fed to lower borrowing costs and has indicated he wants Jerome Powell, chair of the Fed, to resign. The possibility of Trump quickly gaining a supportive majority on the board increased after Adriana D. Kugler resigned before her term ended. Trump nominated Stephen I. Miran, one of his top economic advisers and a critic of the Fed, as Kugler’s replacement; Miran could be confirmed by September.
The president may get another opportunity if courts allow him to remove Governor Lisa Cook over unproven mortgage fraud allegations. Cook has not been charged or convicted but filed a lawsuit against Trump seeking to keep her position, arguing that allegations do not meet the legal threshold for removal.
If Cook is removed, Trump could nominate another supporter. In his first term, he appointed Christopher J. Waller and Michelle W. Bowman as governors and elevated Powell as chair; Powell’s term ends in May.
Interest rate decisions are made by a 12-member Federal Open Market Committee (FOMC), including all seven governors and five rotating presidents from regional reserve banks. Although no single group controls FOMC decisions outright, four dissenting governors can significantly affect debates around monetary policy.
Recent votes show growing division: last month Waller and Bowman dissented against holding rates steady—the first such double dissent since 1993.
A majority on the board also impacts reappointments for regional reserve bank presidents every five years—a process usually routine but now drawing attention ahead of a March deadline. Janet Yellen, former Fed chair and Treasury secretary under President Joe Biden, warned: “Gaining control of the board by that time could result in an attempt to displace some of the presidents.”
Regional presidents are chosen by local directors rather than presidential nomination or Senate confirmation; however, their appointments require board approval.
Kathryn Judge, Columbia Law School professor specializing in financial regulation, noted that while geographic lines separating regional banks might be adjusted by the board’s authority, it is unclear if any district could be eliminated entirely.
A compliant majority could also influence other major decisions regarding asset holdings or emergency lending operations with foreign central banks. Regulatory rulings affecting large U.S. banks are decided solely by board vote—a simple majority would enable changes aligned with presidential priorities.
Three FOMC members can call unscheduled meetings—something Graham Steele, former Treasury official and financial regulation lawyer, cautioned might allow allies “to make ‘additional mischief that could really affect’” monetary policy if used strategically.
Yellen expressed concern about potential staff dismissals: “It seems to me that you could see some substantial personnel changes at the board… getting rid of people with expertise who have always supported independence.” She added this would have “profoundly negative consequences on monetary policy.”
Economists worry these moves may undermine global confidence in the Fed’s credibility as a key pillar supporting both U.S. and international financial systems.
“All of this is not only unprecedented but also unconstructive,” said Douglas Rediker, former U.S. representative at the International Monetary Fund and founder of International Capital Strategies. “It sends a message that is more akin to a chaotic, dysfunctional system than what markets… have always assumed… which is that [the Fed] is the gold standard for governance… independence… prudence… policymaking.”
This article was originally published August 31, 2025 in The New York Times.
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