ReportWire

Tag: Federal Reserve Board

  • Trump picks Kevin Warsh to chair Federal Reserve amid pressure campaign to cut rates

    [ad_1]

    President Trump said Friday he is nominating Kevin Warsh to serve as the next chair of the Federal Reserve Board, filling a powerful economic policy role as the president pushes for lower interest rates.

    Mr. Trump made the announcement on his Truth Social platform.

    Warsh was a member of the Fed’s board for five years starting in 2006, when former President George W. Bush named him to the central bank right before the financial crisis. In recent years, he has worked with billionaire investor Stanley Druckenmiller and held academic positions, including at the Hoover Institution.

    in this Dec. 11, 2014 photo, Kevin Warsh speaks to the media about his report on transparency at the Bank of England, in London.

    Alastair Grant / AP


    If confirmed by the Senate, Warsh will helm a Federal Reserve that has faced months of intense pressure from Mr. Trump to dramatically slash rates — a move that could boost economic growth, but at the risk of sparking higher inflation. The Fed has lowered rates three times since September, most recently on Dec. 10, but Fed officials indicated in a projection earlier this month that they expect just one cut this year.

    Warsh suggested earlier this year he’s open to lower interest rates, and he’s been deeply critical of the Fed’s handling of inflation in recent years, arguing the central bank has a “credibility crisis” and is in need of “regime change.” But he has also called it “essential” that the Fed maintain its independence over monetary policy.

    Warsh was picked to replace outgoing Federal Reserve Chair Jerome Powell, who has drawn Mr. Trump’s ire for the Fed’s perceived slow pace of lowering rates. The president has called Powell a “dumb guy,” a “stubborn mule” and “Mr. Too Late,” and has mused about firing him. 

    Then, in a surprise video announcement earlier this month, Powell said the Fed had received subpoenas threatening him with criminal charges over a pricey project to renovate the central bank’s D.C. headquarters. Powell argued the investigation was part of an attempt to intimidate the Fed for its interest rate decisions, undermining its independence. The White House said Mr. Trump didn’t direct the Justice Department to issue the subpoenas.

    Powell was initially appointed Fed chair by Mr. Trump in 2018, and was named to a second four-year term by former President Joe Biden.

    In an opinion piece earlier this year, economist Kenneth Rogoff said Warsh is “highly regarded” but “even more hawkish than Powell,” meaning he tends to support higher interest rates.

    The discord over Powell could make it more difficult to confirm Warsh. Several Senate Republicans sharply criticized the Justice Department’s subpoenas, with Sen. Thom Tillis of North Carolina vowing to oppose all Fed nominees “until this legal matter is fully resolved.”

    Some Fed-watchers also think the subpoenas might make Powell more likely to stay on the Federal Reserve’s seven-member board as a rank-and-file member after his term as chair ends in May. Most Fed chairs have resigned from the board after they’re no longer the boss, but Powell can remain a board member until early 2028, diluting Mr. Trump’s influence.

    How interest rates are determined

    Target interest rates are technically set not by the Fed chair, but instead by a 12-member panel called the Federal Open Market Committee. The chair has historically wielded a great deal of influence over the committee’s decision and helped build consensus.

    When setting rate targets, the Fed faces a balancing act between its dual goals of keeping inflation low and employment levels high. In 2022 and 2023, the Fed hiked interest rates from near 0% to a decades-long high, aiming to stem the worst inflation in around 40 years. 

    Since then, the central bank has lowered rates at a slow clip, cutting by a percentage point in late 2024, leaving them steady for most of 2025 and cutting by 0.75 percentage points since September. It kept the benchmark rate unchanged in its most recent meeting earlier this week.

    The Fed has suggested it wants to move cautiously due to uncertain economic conditions. Inflation has fallen significantly since its 2022 peak but remains above the Fed’s 2%-per-year target, and the job market has cooled off despite the unemployment rate remaining fairly low. Powell has also warned that Mr. Trump’s tariffs are contributing to inflation.

    Mr. Trump has openly pushed back against this strategy, and has made no secret of his desire for the next Fed chair to move more quickly on cutting rates.

    “I’m looking for somebody that will be honest with interest rates,” he told reporters on Dec. 10 when asked about the search for a new chair. “Our rates should be much lower.”

    The president has long asserted that the Fed should take his views into account. Mr. Trump said on Dec. 12 that “my voice should be heard” on rate-setting decisions, arguing he has strong instincts because of his business background.

    “I’ve made a lot of money, I’ve been very successful, and I think my role should be at least that of recommending,” the president said. “They don’t have to follow what I say.”

    Mr. Trump has also tried to fire Fed board member Lisa Cook, accusing her of mortgage fraud, though the courts have left Cook in place while her lawsuit seeking to reverse the firing proceeds. Under federal law, members of the Fed board can only be fired for cause.

    The Fed has a longstanding history of acting independently from the executive branch. Experts believe the Fed’s ability to set interest rates on its own gives the central bank credibility and eases fears that it is motivated by politics. And some economists worry that a loss of independence could lead to higher inflation in the long run because presidents may be tempted by the politically popular short-term benefits of low interest rates, like a hotter economy.

    Asked on Dec. 10 if he pushed finalists for the Fed chair job to pledge to lower rates, Mr. Trump said: “No. I’ll be asking questions and I’ll be able to figure it out.”

    In:

    [ad_2]

    Source link

  • Who is Kevin Warsh, Trump’s pick to succeed Jerome Powell as Federal Reserve chair

    [ad_1]

    President Trump’s move to nominate Kevin Warsh to replace Jerome Powell as Federal Reserve chair is likely to be viewed as a safe choice on Wall Street, elevating a former Fed official with well-established views on inflation.

    Powell, who has led the Fed since February 2018 after being nominated for the top role by Mr. Trump during his first term as president, is set to step down in May 2026. In his second term, however, Mr. Trump has grown increasingly critical of Powell, regularly disparaging the Fed chief and pressing him to lower interest rates.

    Warsh, 55, served as a Federal Reserve governor  — one of seven officials who guide the central bank’s policy decisions — from 2006 through 2011, a period that includes the deep recession that followed the 2008 financial crisis.

    In recent years, Warsh has grown increasingly critical of the Fed, arguing that the institution has become excessively focused on backward-looking economic data rather than anticipating changes, Deutsche Bank analysts said in a December 15 report. Still, Warsh has held hawkish views, meaning that he has emphasized the importance of fighting inflation, leaning toward keeping interest rates higher rather than cutting, experts note. 

    Trump’s nomination of Warsh is “one of the better outcomes for investors compared to the other contenders that had been in the running,” said Stephen Brown, deputy chief North America economist at Capital Economics, in a note to investors.

    “Warsh’s long-running hawkish views should help to counteract concerns that he might morph into a full-blown Trump stooge,” he added.

    In a November Wall Street Journal opinion piece, Warsh said the Fed’s “bloated balance sheet” has contributed to the economic malaise affecting many Americans, allowing borrowing to be “too easy” for Wall Street while “credit on Main Street is too tight.”

    Kevin Warsh during the International Monetary Fund (IMF) and World Bank Spring meetings at IMF headquarters in Washington, D.C. on April 25, 2025.

    Tierney L. Cross / Bloomberg via Getty Images / Tierney L CROSS


    Aligned with Trump on interest rates

    The Federal Reserve raises and lowers its benchmark interest rate as necessary to control inflation and support job growth — a mission central bank officials have long said requires insulating the Fed from political pressure. 

    Warsh has recently argued for lower interest rates, a view that aligns with Mr. Trump’s push for the Fed to ease borrowing costs. 

    “On policy decisions, Warsh’s recent comments suggest he could support lower policy rates, possibly counterbalanced by a smaller balance sheet,” the Deutsche Bank analysts said.

    The Fed held rates steady at its Jan. 28 meeting, marking the central bank’s first pause after three consecutive cuts. Powell cited the U.S. economy’s strong growth and a stabilization in the labor market as reasons that the majority of the 12-person Federal Open Market Committee voted to keep its benchmark rate unchanged at between 3.5% and 3.75.%.

    Mr. Trump criticized the decision on Thursday, writing on social media, “The Fed should substantially lower interest rates, NOW!”

    To be sure, Warsh’s view wouldn’t necessarily dictate Fed policy, given that the Fed chair doesn’t set interest rates unilaterally. Rather, decisions on the federal funds rate, which affects borrowing costs for consumers and businesses, are set by a majority vote among the 12 members of the Federal Open Market Committee (FOMC).

    FOMC members are also likely to signal to Wall Street that the central bank remains insulated from political pressure after a change in Fed leadership, reducing the odds of a sharp shift in monetary policy, Deutsche Bank said.

    In the orbit of billionaires

    Warsh, a graduate of Stanford University and Harvard Law School, went to work on Wall Street at Morgan Stanley after getting his law degree. He worked in mergers and acquisitions at the investment bank. 

    In 2002, Warsh joined President George W. Bush’s administration, where he worked in the National Economic Council. The president tapped him to serve on the Fed board of governors in 2006, making Warsh the youngest person ever to hold the position. 

    Since leaving the Fed in 2011, Warsh has worked for think tanks such as the conservative-leaning Hoover Institution and has also taught at Stanford Business School.

    More recently, Warsh has worked with billionaire investor Stanley Druckenmiller, whose estimated $11 billion net worth stems from his work at hedge funds such as George Soros’ Quantum Fund. 

    In 2011, Druckenmiller appointed Warsh to serve as a partner at the investor’s Duquesne Family Office, where Warsh told Barron’s that he oversees the billionaire’s “small nest egg.”

    Warsh is also married to a billionaire: cosmetics heiress Jane Lauder, whose net worth is estimated at $2.5 billion by Forbes. 

    In a July interview with CNBC, Warsh expressed optimism about the Trump administration’s economic policies, as well as the potential for artificial intelligence to boost business productivity. 

    “AI is going to make everything cost less, and the U.S. could be the big winner,” he said. “If I were the president, what I would be worried about is a central bank that doesn’t see any of that — a central bank that is stuck with models from 1978.”

    Edited by

    Alain Sherter

    In:

    [ad_2]

    Source link

  • Supreme Court puts off decision on Trump’s attempt to fire Lisa Cook from Fed, keeping her in place for now

    [ad_1]

    Washington — The Supreme Court on Wednesday said it will hear arguments in January on whether President Trump can fire Lisa Cook from her position on the Federal Reserve Board of Governors.

    The high court said in a brief unsigned order that it is not yet acting on Mr. Trump’s request for emergency relief. The Trump administration asked the Supreme Court last month to freeze a lower court order that found Cook’s purported removal was likely illegal and allowed her to remain a Fed governor.

    By deferring a decision on the president’s bid for emergency relief, Cook can remain in her position on the Fed’s Board of Governors for now.

    Cook participated in a two-day meeting of the Fed’s interest-rate-setting committee last month, which culminated with the central bank announcing its first cut to its benchmark interest rate in nine months. The panel will meet next in October and December.

    Her lawyers warned the Supreme Court that allowing Mr. Trump to remove Cook from the board of governors even for a brief period would have severe consequences, risking chaos and disruption of financial markets. 

    Accepting the president’s argument, Cook’s lawyers said, “would eviscerate the Federal Reserve’s longstanding independence, upend financial markets, and create a blueprint for future presidents to direct monetary policy based on their political agendas and election calendars.”

    But they warned it would also open the Fed up to political influence. Granting Mr. Trump the emergency relief he sought would “sound the death knell” for the Fed’s independence” and transform it into a body that is “subservient to the President’s will,” Cook’s lawyers wrote.

    Cook’s attorneys, Abbe Lowell and Norm Eisen, said in a statement that the order “rightly allows Governor Cook to continue in her role on the Federal Reserve Board, and we look forward to further proceedings consistent with the Court’s order.” 

    White House spokesperson Kush Desai said in response to the Supreme Court’s move that “President Trump lawfully removed Lisa Cook for cause from the Federal Reserve Board of Governors. We look forward to ultimate victory after presenting our oral arguments before the Supreme Court in January.” 

    Mr. Trump’s attempt to fire Cook from the Fed board in August and her subsequent lawsuit arguing the removal broke the law set up a major test of his authority to oust key officials at the central bank. The president has criticized the Fed for not lowering interest rates sooner and is seeking to put his stamp on the seven-member board.

    The Senate confirmed Stephen Miran, an adviser to Mr. Trump, to the board of governors last month. Miran chaired the White House’s Council of Economic Advisers and is taking an unpaid leave of absence from that job while serving on the Fed board, an unusual move.

    Mr. Trump’s efforts to oust Cook are unprecedented, as no president has attempted to remove a sitting Fed governor in the central bank’s 112-year-history. Critics of the move have warned that the effort harms the Fed’s independence and could destabilize markets.

    In announcing his decision to fire her, the president claimed Cook made misrepresentations on mortgage documents in 2021, before she was appointed to the board of governors, by claiming two different properties in Ann Arbor, Michigan, and Atlanta as her principal residence in order to gain more favorable lending terms.

    Cook’s lawyers have said she “did not ever commit mortgage fraud,” and she has not been charged with any wrongdoing. They called the allegations “flimsy” and “unproven.” Reuters reported that a loan estimate for the property in Atlanta, dated May 28, 2021, showed that Cook declared that residence as a “vacation home.”

    But Mr. Trump said the alleged misstatements gave him “sufficient cause” to remove Cook from the Fed board.

    “That the Federal Reserve Board plays a uniquely important role in the American economy only heightens the government’s and the public’s interest in ensuring that an ethically compromised member does not continue wielding its vast powers,” Solicitor General D. John Sauer wrote in a request for emergency relief to the Supreme Court. 

    He continued: “Put simply, the President may reasonably determine that interest rates paid by the American people should not be set by a Governor who appears to have lied about facts material to the interest rates she secured for herself — and refuses to explain the apparent misrepresentations.”

    U.S. District Judge Jia Cobb ruled last month that Mr. Trump’s attempt to fire Cook likely violated federal law because he did not state a legally permissible cause for her removal. The judge said the president’s reason for ousting Cook rests on alleged actions before she joined the Fed board, and found the requirement that Fed governors can only be removed “for cause” covers only conduct while in-office.

    Cook joined the Fed board in 2022 and was reappointed by President Biden to a 14-year-term that is set to end in 2038.

    Cobb also ruled that Cook’s due process rights were likely violated because she did not receive notice and an opportunity to be heard before her removal.

    The Trump administration appealed the district judge’s decision to the U.S. Court of Appeals for the District of Columbia Circuit, which voted 2-1 to decline its request to let Mr. Trump fire Cook.

    The two-judge majority agreed that Cook did not receive adequate process before her removal. It did not address whether Mr. Trump satisfied the “for cause” removal requirement.

    In its emergency appeal to the Supreme Court, the Trump administration said it is not challenging the constitutionality of the for-cause removal restriction for Fed governors enacted by Congress.

    But Cook’s lawyers said there must be “some meaningful check” on the president’s ability to remove her.

    “Otherwise, any president could remove any governor based on any charge of wrongdoing, however flawed,” they wrote in a Supreme Court filing. “That regime is not what Congress envisioned when it protected the Federal Reserve Board from presidential control. That regime is not what this Court envisioned when it went out of its way to single out the Board as a unique institution with a unique history of independence.”

    Cook is one of several Democratic-appointed officials at independent agencies that Mr. Trump has moved to fire since returning to the White House. The Supreme Court has so far allowed the president to oust members of the National Labor Relations Board, Merit Systems Protection Board, Consumer Product Safety Commission and Federal Trade Commission without cause.

    It will hear arguments in December on the constitutionality of removal protections for FTC commissioners and whether to overturn a key 1935 decision that allowed Congress to insulate certain independent agencies from political pressure. The case tests the scope of the president’s removal authority.

    But the high court in May suggested the Fed is different from those agencies because it is a “uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States.”

    Melissa Quinn

    Melissa Quinn is a politics reporter for CBSNews.com, where she covers U.S. politics, with a focus on the Supreme Court and federal courts.

    [ad_2]

    Source link

  • Supreme Court puts off decision on whether Trump may fire Federal Reserve Governor Lisa Cook

    [ad_1]

    WASHINGTON — The Supreme Court on Wednesday put off a decision on whether President Trump can fire Federal Reserve Govenor Lisa Cook and said it would hear arguments on the case in January.

    The court’s action allows Cook to remain in her position, and it prevents Trump from taking majority control of the historically independent central bank board.

    Last month, the president said he fired Cook “for cause,” citing mortgage documents she signed in 2021 confirming that two different properties were her primary residence.

    But the flap over her mortgages arose as Trump complained that the Federal Reserve Board, including Cook, had not lowered interest rates to his satisfaction.

    “We will have a majority very shortly,” Trump said after he fired Cook.

    In September, Trump appointed Stephen Miran, the chair of of his White House Council of Economic Advisers, to serve a temporary term on the seven-member Federal Reserve Board. He joined two other Trump appointees.

    Congress wrote the Federal Reserve Act of 1913 intending to give the central bank board some independence from politics and the current president.

    Its seven members are appointed by the president and confirmed by the Senate, and they serve staggered terms of 14 years, unless “removed for cause by the president.”

    The law does not define what amounts to cause.

    President Biden appointed Cook to a temporary term in 2022 and to a full term a year later.

    In August, however, Bill Pulte, Trump’s director of the Federal Housing Finance Agency, alleged that Cook committed mortgage fraud when she took out two housing loans in 2021. One was for $203,000 for a house in Ann Arbor, Mich., and the second was for $540,000 for a condo in Atlanta. In both instances, he said she signed a loan document saying the property would be her primary residence.

    Mortgage lenders usually offer a lower interest rate for a borrower’s primary residence.

    Cook has not directly refuted the allegation about her mortgage documents, but her attorneys said she told the lender she was seeking the Atlanta condo as a vacation home.

    Trump, however, sent Cook a letter on Aug. 25. “You may be removed, at my discretion, for cause,” citing the law and Pulte’s referral. “I have determined that there is sufficient cause to remove you from your position,” he wrote.

    Cook refused to step down and filed a suit to challenge the decision. She argued the allegation did not amount to cause under the law, and she had not been given a hearing to contest it.

    A federal judge in Washington agreed and blocked her firing, noting that unproven allegation of mortgage fraud occurred before she was appointed to the Federal Reserve.

    By a 2-1 vote, the appeals court also refused to uphold her firing.

    Trump’s lawyers sent an emergency appeal to the Supreme Court on Sept. 18 arguing Congress gave the president the authority to fire a Fed governor he concludes she is not trustworthy.

    “Put simply, the President may reasonably determine that interest rates paid by the American people should not be set by a Governor who appears to have lied about facts material to the interest rates she secured for herself — and refuses to explain the apparent misrepresentations,” wrote Trump Solicitor Gen. D. John Sauer.

    But the justices refused to act on an emergency appeal and decided they will give the case a full hearing and a written decision.

    [ad_2]

    David G. Savage

    Source link

  • Supreme Court to reconsider a 90-year-old precedent protecting independent agency officials

    [ad_1]

    WASHINGTON — The Supreme Court said Monday it will decide on reversing a 90-year precedent that has protected independent agencies from direct control by the president.

    The court’s conservative majority has already upheld President Trump’s firing of Democratic appointees at the National Labor Relations Board and Merit Systems Protection Board. And in a separate order on Monday, it upheld Trump’s removal of a Democratic appointee at the Federal Trade Commission.

    Those orders signal the court is likely to rule for the president and that he has the full authority to fire officials at independent agencies, even if Congress said they had fixed terms.

    The only hint of doubt has focused on the Federal Reserve Board. In May, when the court upheld the firing of an NLRB official, it said its decision does not threaten the independence of the Federal Reserve.

    The court described it as “a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States.” Trump did not share that view. He threatened to fire Federal Reserve Chair Jerome Powell during the summer because he had not lowered interest rates.

    And he is now seeking to fire Federal Reserve Governor Lisa Cook, a Biden appointee, based on the allegation she may have committed mortgage fraud when she took out two home loans in 2021.

    Trump’s lawyers sent an emergency appeal to the Supreme Court last week seeking to have Cook removed now.

    Long before Trump’s presidency, Chief Justice John G. Roberts Jr. had argued that the president has the constitutional power to control federal agencies and to hire or fire all officials who exercise significant executive authority.

    But that view stands in conflict with what the court has said for more than a century. Since 1887, when Congress created the Interstate Commerce Commission to regulate railroad rates, lawmakers on Capitol Hill believed they had the authority to create independent boards and commissions.

    Typically, the president would be authorized appoint officials who would serve a fixed term set by law. At times, Congress also required the boards have a mix of both Republican and Democratic appointees.

    The Supreme Court unanimously upheld that understanding in a 1935 case called Humphrey’s Executor. The justices said then these officials made judicial-type decisions, and they should be shielded from direct control by the president.

    That decision was a defeat for President Franklin Roosevelt who tried to fire a Republican appointee on the Federal Trade Commission.

    In recent years, the chief justice and his conservative colleagues have questioned the idea that Congress can shield officials from direct control by the president.

    In Monday’s order, the court said it will hear arguments in December on “whether the statutory removal protections for members of the Federal Trade Commission violate the separation of powers and, if so, whether Humphrey’s Executor v. United States, 295 U. S. 602 (1935), should be overruled.”

    Justice Elena Kagan has repeatedly dissented in these cases and argued that Congress has the power to make the law and structure the government, not the president.

    Joined by Justices Sonia Sotomayor and Ketanji Brown Jackson, she objected on Monday that the court has continued to fire independent officials at Trump’s request.

    “Our emergency docket should never be used, as it has been this year, to permit what our own precedent bars,” she wrote. “Still more, it should not be used, as it also has been, to transfer government authority from Congress to the President, and thus to reshape the Nation’s separation of powers.”

    [ad_2]

    David G. Savage

    Source link

  • Trump asks Supreme Court to uphold his firing of Federal Reserve Governor Lisa Cook

    [ad_1]

    WASHINGTON — President Trump appealed to the Supreme Court on Thursday seeking to fire Federal Reserve Governor Lisa Cook from the independent board that can raise or lower interest rates.

    The appeal “involves yet another case of improper judicial interference with the President’s removal authority — here, interference with the President’s authority to remove members of the Federal Reserve Board of Governors for cause,” Solicitor Gen. D. John Sauer wrote.

    The appeal is the second this month asking the court to give Trump broad new power over the economy.

    The first, to be heard in November, will decide if the president to free to impose large import taxes on products coming into this country.

    The new case could determine if he is free to remake the Federal Reserve Board by removing a Democratic appointee who he says may have broken the law.

    Trump’s lawyers argue that a Fed governor has no legal right to challenge the president’s decision to fire her.

    “Put simply, the President may reasonably determine that interest rates paid by the American people should not be set by a Governor who appears to have lied about facts material to the interest rates she secured for herself — and refuses to explain the apparent misrepresentations,” Trump’s lawyer said.

    Trump has chafed at the Federal Reserve board for keeping interest rates high to fight inflation, and he threatened to fire board Chairman Jerome Powell, even though Trump appointed him to that post in 2018.

    But last month, Trump turned his attention to Cook and said he had cause to fire her.

    Congress wrote the Federal Reserve Act of 1913 intending to give the central bank board some independence from politics and the current president.

    Its seven members are appointed by the president and confirmed by the Senate, and they serve staggered terms of 14 years, unless “removed for cause by the president.”

    The law does not define what amounts to cause.

    President Biden appointed Cook in 2023 and she was confirmed to a full term.

    In August, however, Bill Pulte, Trump’s director of the Federal Housing Finance Agency, alleged Cook committed mortgage fraud when she took out two housing loans in 2021. One was for $203,000 for a house in Ann Arbor, Mich., and the second was for $540,000 for a condo in Atlanta. In both instances, he said she signed a loan document saying the property would be her primary residence.

    Typically, borrowers obtain a better interest rate for a primary residence. But lawyers say charges of mortgage fraud are extremely rare if the borrower makes the required regular payments on the loan.

    About 30 minutes after Pulte posted his allegations, Trump posted on his social media site: “Cook must resign. Now!!!”

    Cook has not responded directly to the allegations, but her attorneys pointed to news reports that said she told the lender her Atlanta condo would be a vacation home.

    Trump, however, sent Cook a letter on Aug. 25. “You may be removed, at my discretion, for cause,” citing the law and Pulte’s referrral. “I have determined that there is sufficient cause to remove you from your position,” he wrote.

    Cook filed a suit to challenge the decision. She argued the allegation did not amount to cause under the law, and she had not been given a hearing to contest the charges.

    U.S. District Judge Jia Cobb, a Biden appointee, agreed she made a “strong showing” the firing was illegal and blocked her removal.

    She said Congress wrote the “for cause” provision to punish “malfeasance in office,” not conduct that pre-dated her appointment. She also said Cook had been denied “due process of law” because she was not given a hearing.

    The U.S. appeals court in Washington, by a 2-1 vote, refused to lift her order Monday.

    Judges Bradley Garcia and J. Michelle Childs, both Biden appointees, said Cook had been denied “even minimal process — that is, notice of the allegation against her and a meaningful opportunity to respond — before she was purportedly removed.”

    Judge Gregory Katsas, a Trump appointee, dissented. He said the “for cause” removal provision was broader than misconduct in office. It means the president may remove an officer for “some cause relating to” their “ability, fitness, or competence” to hold the office, he said.

    And because a government position is not the property of office holders, they do not have a “due process” right to contest their firing, he said.

    [ad_2]

    David G. Savage

    Source link

  • Senate approves White House economist Stephen Miran to serve on Federal Reserve board

    [ad_1]

    The Senate has approved one of President Donald Trump’s top economic advisers for a seat on the Federal Reserve’s governing board, giving the White House greater influence over the central bank just two days before it is expected to vote in favor of reducing its key interest rate.The vote to confirm Stephen Miran was largely along party lines, 48-47. He was approved by the Senate Banking Committee last week with all Republicans voting in favor and all Democrats opposed.Miran’s nomination has sparked concerns about the Fed’s longtime independence from day-to-day politics after he said during a committee hearing earlier this month that he would keep his job as chair of the White House’s Council of Economic Advisers, though would take unpaid leave. Senate Democrats have said such an approach is incompatible with an independent Fed.Senate Democratic Leader Chuck Schumer said ahead of the vote that Miran “has no independence” and would be “nothing more than Donald Trump’s mouthpiece at the Fed.”The vote was along party lines, with Alaska Sen. Lisa Murkowski the only Republican to vote against Miran.Miran is completing an unexpired term that ends in January, after Adriana Kugler unexpectedly stepped down from the board Aug. 1. He said if he is appointed to a longer term he would resign from his White House job. Previous presidents have appointed advisers to the Fed, including former chair Ben Bernanke, who served in president George W. Bush’s administration. But Bernanke and others left their White House jobs when joining the board.Miran said during his Sept. 4 hearing that, if confirmed, “I will act independently, as the Federal Reserve always does, based on my own personal analysis of economic data.”Last year, Miran criticized what he called the “revolving door” of officials between the White House and the Fed, in a paper he co-wrote with Daniel Katz for the conservative Manhattan Institute. Katz is now chief of staff at the Treasury Department.Miran’s approval arrives as Trump’s efforts to shape the Fed have been dealt a setback elsewhere. He has sought to fire Fed governor Lisa Cook, who was appointed by former President Joe Biden to a term that ends in 2038. Cook sued to block the firing and won a first round in federal court, after a judge ruled the Trump administration did not have proper cause to remove her.The administration appealed the ruling, but an appeals court rejected that request late Monday. Members of the Fed’s board vote on all its interest rate decisions, and also oversee the nation’s financial system.The jockeying around the Fed is occurring as the economy is entering an uncertain and difficult period. Inflation remains stubbornly above the central bank’s 2% target, though it hasn’t risen as much as many economists feared when Trump first imposed sweeping tariffs on nearly all imports. The Fed typically would raise borrowing costs, or at least keep them elevated, to combat worsening inflation.At the same time, hiring has weakened considerably and the unemployment rate rose last month to a still-low 4.3%. The central bank often takes the opposite approach when unemployment rises, cutting rates to spur more borrowing, spending and growth.Economists forecast the Fed will reduce its key rate after its two-day meeting ends Wednesday, to about 4.1% from 4.3%. Trump has demanded much deeper cuts.

    WASHINGTON —

    The Senate has approved one of President Donald Trump’s top economic advisers for a seat on the Federal Reserve’s governing board, giving the White House greater influence over the central bank just two days before it is expected to vote in favor of reducing its key interest rate.

    The vote to confirm Stephen Miran was largely along party lines, 48-47. He was approved by the Senate Banking Committee last week with all Republicans voting in favor and all Democrats opposed.

    Miran’s nomination has sparked concerns about the Fed’s longtime independence from day-to-day politics after he said during a committee hearing earlier this month that he would keep his job as chair of the White House’s Council of Economic Advisers, though would take unpaid leave. Senate Democrats have said such an approach is incompatible with an independent Fed.

    Senate Democratic Leader Chuck Schumer said ahead of the vote that Miran “has no independence” and would be “nothing more than Donald Trump’s mouthpiece at the Fed.”

    The vote was along party lines, with Alaska Sen. Lisa Murkowski the only Republican to vote against Miran.

    Miran is completing an unexpired term that ends in January, after Adriana Kugler unexpectedly stepped down from the board Aug. 1. He said if he is appointed to a longer term he would resign from his White House job. Previous presidents have appointed advisers to the Fed, including former chair Ben Bernanke, who served in president George W. Bush’s administration. But Bernanke and others left their White House jobs when joining the board.

    Miran said during his Sept. 4 hearing that, if confirmed, “I will act independently, as the Federal Reserve always does, based on my own personal analysis of economic data.”

    Last year, Miran criticized what he called the “revolving door” of officials between the White House and the Fed, in a paper he co-wrote with Daniel Katz for the conservative Manhattan Institute. Katz is now chief of staff at the Treasury Department.

    Miran’s approval arrives as Trump’s efforts to shape the Fed have been dealt a setback elsewhere. He has sought to fire Fed governor Lisa Cook, who was appointed by former President Joe Biden to a term that ends in 2038. Cook sued to block the firing and won a first round in federal court, after a judge ruled the Trump administration did not have proper cause to remove her.

    The administration appealed the ruling, but an appeals court rejected that request late Monday.

    Members of the Fed’s board vote on all its interest rate decisions, and also oversee the nation’s financial system.

    The jockeying around the Fed is occurring as the economy is entering an uncertain and difficult period. Inflation remains stubbornly above the central bank’s 2% target, though it hasn’t risen as much as many economists feared when Trump first imposed sweeping tariffs on nearly all imports. The Fed typically would raise borrowing costs, or at least keep them elevated, to combat worsening inflation.

    At the same time, hiring has weakened considerably and the unemployment rate rose last month to a still-low 4.3%. The central bank often takes the opposite approach when unemployment rises, cutting rates to spur more borrowing, spending and growth.

    Economists forecast the Fed will reduce its key rate after its two-day meeting ends Wednesday, to about 4.1% from 4.3%. Trump has demanded much deeper cuts.

    [ad_2]

    Source link

  • Appeals court denies Trump bid to remove Federal Reserve board member Lisa Cook

    [ad_1]

    A federal appeals court has rejected President Donald Trump’s bid to quickly fire Federal Reserve board member Lisa Cook.

    The decision leaves the president just hours to ask the Supreme Court to oust her before a critical interest-rate setting meeting kicks off Tuesday.

    The 2-1 ruling Monday by a panel of the D.C. Circuit Court of Appeals is unlikely to be the last word on the matter, given the anticipated Supreme Court action. But it sets up a race against the clock to determine whether Cook, a Biden appointee who Trump tried to fire last month, will participate in this week’s Fed meeting.

    Judges J, Michelle Childs and Bradley Garcia, both Biden appointees, voted to leave Cook in her post, while Judge Gregory Katsas, a Trump appointee, dissented.

    [ad_2]

    Source link

  • Fed Gov. Lisa Cook claimed Atlanta condo as ‘vacation home,’ undercutting Trump fraud claims

    [ad_1]

    Federal Reserve Governor Lisa Cook has been allowed to remain in her position after securing an injunction against the Trump administration’s attempt to fire her over allegations of mortgage fraud.

    President Donald Trump has sought to remove Cook from the Federal Reserve Board, citing claims that she improperly designated two properties as her primary residence to obtain favorable mortgage terms.

    Cook referred to her Atlanta condominium she purchased in June 2021, as a ‘vacation home’ in a loan estimate, which contradicts the administration’s allegations.

    Bill Pulte, a Trump appointee, accused Cook of signing documents claiming both the Atlanta condo and a home in Ann Arbor, Michigan, as primary residences.

    This led to a criminal referral to the Justice Department, which is investigating the matter.

    Cook described the Atlanta property as a ‘second home’ on a security clearance form, further complicating the allegations against her.

    The administration’s appeal of the injunction is pending, with an emergency ruling requested before the Federal Reserve’s upcoming meeting to decide on interest rates.

    TRENDING STORIES:

    Fulton County tax records indicate that Cook has not claimed a homestead exemption on the condo, which would typically be used by someone designating a property as their primary residence.

    The outcome of the Justice Department’s investigation and the administration’s appeal remains uncertain, leaving Cook’s future at the Federal Reserve in question as the central bank prepares for its next meeting.

    Information from this article from the Associated Press.

    [ad_2]

    Source link

  • Trump administration asks appeals court to let president fire Fed governor Lisa Cook before key meeting

    [ad_1]

    The Trump administration asked a federal appeals court Thursday to lift a ruling that blocked President Trump from firing Federal Reserve Governor Lisa Cook, in time for a crucial meeting next week when Fed officials will decide whether to lower interest rates.

    Mr. Trump moved to fire Cook from the Federal Reserve’s powerful Board of Governors last month, accusing her of falsely claiming two different homes as her principal residence in mortgage documents. U.S. District Judge Jia Cobb blocked the firing on Tuesday, concluding that the president “has not stated a legally permissible cause for Cook’s removal.” Under federal law, Fed board members serve for 14-year terms and can only be removed “for cause.”

    On Thursday, the Trump administration asked the U.S. Court of Appeals for the D.C. Circuit to stay that ruling while the government appeals it. The Justice Department argued that the president has broad discretion to remove federal officials, including to decide whether “cause” exists, and courts have — at most — extremely narrow authority to review those decisions.

    “Here, the evidence—which Cook has yet to offer contrary explanation for—was that she applied for two loans for her personal benefit, and was able to obtain favorable interest rates by misrepresenting where she lived,” the government argued Thursday. “Regardless of whether that misconduct occurred before or during office, it indisputably calls into question Cook’s trustworthiness and whether she can be a responsible steward of the interest rates and economy for the whole Nation.”

    Those allegations surfaced in a letter from Federal Housing Finance Agency Director Bill Pulte, a Trump appointee who cited mortgage papers for homes that Cook bought in Georgia and Michigan in 2021. Abbe Lowell, an attorney representing Cook, called the government’s accusations “unsubstantiated and vague.”

    The government requested that the appeals court act by the end of the day on Monday, noting that the Federal Open Market Committee, or FOMC, is set to meet on Tuesday and Wednesday.

    Cook’s attorneys asked the appellate court to deny the Trump administration’s request, calling it “wholly unwarranted.”

    “An administrative stay would threaten Governor Cook’s participation in next week’s meeting and potentially plunge the FOMC’s vote into turmoil,” Cook’s attorneys wrote in court papers. “In addition, it has the real potential of impacting domestic and foreign markets. The Government has provided no justification for such a grave disruption of the status quo.”

    Why does the Fed committee matter?

    The Federal Open Market Committee — which includes Cook, Federal Reserve Chair Jerome Powell and 10 other top central bank officials — is responsible for setting the Fed’s interest rate targets, which have a major impact on economic growth, inflation and borrowing costs. The panel typically acts independently, with little input from elected officials.

    The committee has voted to leave interest rates relatively high so far this year, but investors and economists widely expect it to reduce rates at next week’s meeting. Rate cuts could lead to stronger economic growth, but at the risk of causing inflation to heat up.

    Mr. Trump has tangled with the Fed for months over its decision to keep rates steady, nicknaming Powell “Mr. Too Late” and arguing the rate-setting committee should overrule him. Powell’s term ends in May.

    Amid that pressure, Mr. Trump moved to fire Cook in late August. A Biden appointee, Cook’s term on the Fed’s seven-member Board of Governors is set to end in 2038. The allegations against Cook are not related to Mr. Trump’s push against the Fed, but if she is removed from the board, the president could pick her replacement, giving him more influence over the central bank.

    Joe Walsh

    Joe Walsh is a senior editor for digital politics at CBS News. Joe previously covered breaking news for Forbes and local news in Boston.

    [ad_2]

    Source link

  • Judge blocks Trump’s attempt to fire Lisa Cook from Federal Reserve, but Trump can appeal

    [ad_1]

    A federal district judge’s ruling late Tuesday keeps Lisa Cook on the Federal Reserve Board of Governors for now. But it’s probably not the last word in the historic case, which is likely to come from the Supreme Court.

    Cook moved for a temporary restraining order against what she called President Donald Trump’s “unprecedented and illegal” attempt to fire her from the central bank board long before her term’s expiration in 2038. Trump argues that he had cause to fire her, citing his administration’s claim of mortgage fraud by Cook prior to her Senate confirmation. Cook was nominated by former President Joe Biden, as was the judge who sided with her Tuesday in Washington, U.S. District Judge Jia Cobb.

    Cobb wrote that Cook had made a “strong showing” that Trump’s attempt to fire her violated federal law, which requires cause for removal. The judge reasoned that the “for cause” requirement in the Federal Reserve Act “does not contemplate removing an individual purely for conduct that occurred before they began in office.” She wrote that the “best reading of the ‘for cause’ provision is that the bases for removal of a member of the Board of Governors are limited to grounds concerning a Governor’s behavior in office and whether they have been faithfully and effectively executing their statutory duties.”

    Cobb noted that the case involves “the first purported ‘for cause’ removal of a Board Governor in the Federal Reserve’s 111-year history” and that it “raises important matters of first impression,” meaning issues that haven’t been legally resolved by courts before.

    Cook, who has not been officially charged with any fraud, argues that Trump’s claim of wrongdoing against her falls well short of the cause mandated by federal law to remove a board member prematurely. “Without emergency relief,” her lawyers wrote ahead of a hearing Cobb held before she ruled, the government is “now likely to allow an unexpired vacancy to occur for which President Trump has indicated he is ready to fill.”

    Cook’s complaint underscores the stakes, noting that the Federal Reserve’s independence “is vital to its ability to make sound economic decisions, free from the political pressures of an election cycle” and warning that “[i]f markets and the public believe that the central bank is making decisions based on political pressure rather than sound economic data, that confidence erodes.”

    With the justices likely to have the last word, it’s worth noting that, while the high court’s Republican-appointed majority has been boosting Trump’s firing powers in his second term, it also has signaled an intention to protect the Federal Reserve’s independence more than that of other agencies whose members it has been letting Trump fire without cause. That the president has claimed he has cause to fire Cook could help him carry out this particular firing, but his success could hinge on the extent to which the justices say the president must prove his claim (if he has to at all).

    Subscribe to the Deadline: Legal Newsletter for expert analysis on the top legal stories of the week, including updates from the Supreme Court and developments in the Trump administration’s legal cases.

    This article was originally published on MSNBC.com

    [ad_2]

    Source link

  • Federal judge rules Lisa Cook can remain Fed governor for now as Trump tries to fire her

    [ad_1]

    A federal Judge on Tuesday ruled that Lisa Cook can remain in her role on the Federal Reserve’s Board of Governors while her lawsuit challenging President Trump’s attempt to fire her from her post plays out.

    “President Trump has not stated a legally permissible cause for Cook’s removal,” U.S. District Judge Jia Cobb, who was appointed by former President Joe Biden, wrote in her ruling, which is likely to be appealed.

    Mr. Trump said he is firing Cook over allegations she made false representations on mortgage agreements several years ago.  

    “President Trump’s stated cause refers only to allegations regarding Cook’s conduct before she began serving on the Federal Reserve Board,” Cobb wrote. “As discussed above, such allegations are not a legally permissible cause.”

    Abbe David Lowell, an attorney representing Cook in her lawsuit, said in a statement to CBS News on Tuesday night, “This ruling recognizes and reaffirms the importance of safeguarding the independence of the Federal Reserve from illegal political interference. Allowing the President to unlawfully remove Governor Cook on unsubstantiated and vague allegations would endanger the stability of our financial system and undermine the rule of law. Governor Cook will continue to carry out her sworn duties as a Senate-confirmed Board Governor.”

    CBS News has reached out to the White House for comment. 

    Under federal law, Fed board members serve for 14-year terms and can only be fired by the president “for cause.” Cook has served on the Fed since being appointed to complete another member’s unexpired term in 2022, and her current term would run until 2038. 

    This a breaking news story. It will be updated.

    Jordan Freiman

    Jordan Freiman is a news editor for CBSNews.com. He covers breaking news, trending stories, sports and crime. Jordan has previously worked at Spin and Death and Taxes.

    [ad_2]

    Source link

  • Americans’ confidence in finding a new job falls to record low

    [ad_1]

    Job seekers’ confidence in finding new employment has fallen, a new survey reveals.

    According to the Federal Reserve Bank of New York’s Survey of Consumer Expectations, the average “perceived probability” of finding a new job after losing one fell 5.8% points to 44.9% among heads of households surveyed in August, the lowest measure on record since 2013 when the New York Fed began collecting data.

    At the same time, Americans are increasingly worried about losing their current job. Expectations that the U.S. unemployment rate will be higher a year from now crept up 1.7 percentage points to 39.1%, the New York Fed found. 

    The data comes as Americans adopt a dimmer view of the economy. According to a recent CBS News poll, a majority of respondents continue to say the economy is getting worse.

    The labor market has been under a microscope since July employment data showed weaker-than-expected job growth and sharp downward revisions for the months of June and May. August’s data, released Friday, pointed to a slump in U.S. hiring, with employers adding only 22,000 jobs. Unemployment also ticked up to 4.3%, the highest rate since October 2022. 

    “Employers may be holding onto their current workers amid uncertainty, but they are not adding new positions,” Allison Shrivastava, economist at Indeed Hiring Lab, told CBS MoneyWatch. “In turn, employees have taken the hint, staying in their current jobs rather than seeking new opportunities.”

    According to a recent Bankrate survey, about half of Americans are planning to search for a new job in the next year. At the same time, data shows that the number of people changing jobs has slowed significantly since 2022, when millions of people quit their jobs during the “Great Resignation.” 

    During this period, workers had more negotiating power because labor supply disruptions created heightened demand for workers. That balance, however, has started shifting back in favor of employers in recent years.

    A recent analysis from Bank of America shows that the percentage of its customers leaving their jobs has largely trended downward from a more than 26% peak in 2022, and is now just slightly above the job change rate in 2019, at 3.3%. Experts say that’s mainly because there are fewer opportunities for people to switch jobs and general unease with the state of the labor market.

    “If this stagnation continues, unemployment — and layoffs — will increase, further weakening the labor market,” said Shrivastava.

    The Fed, which is tasked with maintaining a robust job market and low inflation, has acknowledged that the downside risks to employment are rising. This strengthens the likelihood that the central bank will cut rates at its next meeting, which is scheduled for Sept. 16 to 17.

    Mary Cunningham

    Mary Cunningham is a reporter for CBS MoneyWatch. Before joining the business and finance vertical, she worked at “60 Minutes,” CBSNews.com and CBS News 24/7 as part of the CBS News Associate Program.

    [ad_2]

    Source link

  • Judge grapples with Trump’s attempt to remove Lisa Cook as Fed governor

    [ad_1]

    Washington — A federal judge on Friday heard arguments over a bid by Federal Reserve Governor Lisa Cook to remain in her post despite President Trump’s efforts to remove her because of allegations she made false representations on mortgage agreements several years ago.

    The two-hour-long hearing before U.S. District Judge Jia Cobb marked the first in-person showdown between Justice Department lawyers and Cook’s legal team in the wake of her lawsuit, filed Thursday, challenging Mr. Trump’s attempt to oust her from the Fed’s Board of Governors. 

    Cook’s lawyers have asked the district court to issue a temporary restraining order finding Mr. Trump’s purported termination of her to be unlawful and declaring that she remains a member of the Fed’s seven-member Board of Governors.

    Cobb, appointed by former President Joe Biden, did not issue a decision from the bench. Instead, she noted that the case raises “important questions that may be of first impression” as it relates to the president’s firing of a Fed governor. She repeatedly pointed to the “unique functions” of the central bank and the importance “of this being an independent body that it is not supposed to be responsive to any type of political pressure.”

    Cook was appointed to the post by Biden in May 2022 and reappointed to a full 14-year term set to end in January 2038. She alleges in her lawsuit that Mr. Trump’s move violates the Federal Reserve Act, which states that the president can only remove a member of the central bank’s Board of Governors “for cause.”

    In his letter informing Cook that he was terminating her from the Fed Board of Governors earlier this week, Mr. Trump wrote that he had “sufficient cause” to remove her from the position. The president cited as grounds for her firing a letter Bill Pulte, director of the Federal Housing Finance Agency, sent to Attorney General Pam Bondi alleging that Cook made false statements on mortgage agreements.

    Pulte, appointed to the post by Mr. Trump, accused Cook of claiming two different properties in Michigan and Georgia as her principal residence on mortgage documents in 2021 in order to gain more favorable lending terms. Cook has not been charged with any civil or criminal offense. 

    Cook’s lawyers said in court papers that she may have “erred” in filling out the form for her private mortgage, but noted that the alleged action took place before she assumed office as a Fed governor.

    “None of the alleged misconduct occurred during the performance of Governor Cook’s duties as a Federal Board member,” they wrote. “And the President and Director Pulte have not even alleged explicitly that Ms. Cook benefited from any clerical error, or that such an error was intentional.”

    In a statement released through the Fed last week, Cook said, “I do intend to take any questions about my financial history seriously as a member of the Federal Reserve and so I am gathering the accurate information to answer any legitimate questions and provide the facts.”

    Abbe Lowell, who argued on Cook’s behalf before the court, said her firing rests solely on Pulte’s assertion that she may have committed wrongdoing. He said Cook did not receive any notice of the allegations against her or a chance to respond to them, which violated her due process rights. Only 30 minutes elapsed between the time Pulte shared on social media the letter to Bondi alleging Cook engaged in mortgage fraud and Mr. Trump, in his own social media post, said she needed to resign, he said.

    “This allegation of fraud has become the weapon of choice” for the Trump administration in removing officials, Lowell said, adding that “cause for the president means she won’t go along with an interest rate drop.” 

    Cook’s lawsuit argues that Mr. Trump’s attempt to oust her is “unprecedented and illegal,” and, if allowed to stand, would be the first removal of a governor by the president in the Fed’s 112-year history. Her attorneys said that while the “for cause” standard is not defined in the Federal Reserve Act, other laws shielding members of independent agencies from being fired without cause require a finding of inefficiency, neglect of duty or malfeasance in office.

    “The President’s effort to terminate a Senate-confirmed Federal Reserve Board member is a broadside attack on the century-old independence of the Federal Reserve System,” Cook’s lawyers wrote in a filing.

    They warned that Mr. Trump’s theory of “cause” would allow him to remove any Fed Board member with whom he disagrees on policy, eroding the central bank’s independence and threatening its mission of providing economic stability.

    Cobb repeatedly pressed Lowell about incorporating the removal protections included in other laws — inefficiency, neglect of duty or malfeasance in office —  into the Federal Reserve Act when that law limits the grounds for removal by the president to “cause.” She also asked Lowell to provide the “best authority” that supports the court articulating a framework for determining that an official’s past conduct can constitute cause for termination.

    Cook’s lawsuit names Mr. Trump, the Board of Governors and Fed Chair Jerome Powell as defendants. In a court filing ahead of the hearing, a lawyer for the central bank said it does not intend to offer arguments about Cook’s effort to block her removal and reiterated that it would follow any court orders.

    Justice Department lawyers defended Mr. Trump’s attempt to fire Cook, writing in a separate filing that “making facially contradictory statements in financial documents — whether a criminal burden of proof could be sustained or not — is more than sufficient ground for removing a senior financial regulator from office.”

    They argued that federal courts cannot second guess the president’s judgment about what constitutes “cause,” so Mr. Trump’s effort to remove Cook is a matter of his discretion and not subject to judicial review. But the Justice Department added that if some judicial review of Cook’s removal is appropriate, it would have to be highly deferential to avoid intruding on the president’s constitutional authority over principal officers.

    “Meanwhile, the President has a strong interest in exercising his statutory authority to remove a federal officer for cause, and the public has a strong interest in stable governance at the Federal Reserve — a stability that would be undercut by the type of pingpong injunctions and stays that have characterized other litigation,” Justice Department lawyers wrote.

    In questions to Yaakov Roth, principal deputy assistant attorney general, Cobb asked whether the president would have broad discretion to determine what constitutes “cause,” given the nature of the Fed Board, and said she was “uncomfortable” with the idea that a president could explicitly express a desire to appoint a majority of governors and instruct his administration to “go dig in” and find reasons to remove sitting members.

    “What if the stated cause is demonstrably false?” she asked Roth. “That’s still not anything that anyone can do anything about?”

    Roth said he was not aware of any statements Mr. Trump had made about Cook before Pulte raised the accusations against her and said there was no indication that Cook’s removal is for any reason other than the allegations about her mortgage applications. He also noted that Cook has yet to offer any explanation for the representations on the documents.

    Cobb, though, also said she had a “strong reaction” to the suggestion that Pulte’s social media post satisfied due-process protections entitling Cook to receive notice of the accusations and an opportunity to respond.

    As to the timing of the alleged misconduct — Cook entered into the mortgage agreements in 2021, before she was appointed to the Fed Board — Cobb said that if Cook’s removal were reviewable, “it feels weird that an administration could go back and second guess the determinations of prior administrations and Congress in their advice and consent role.”

    Roth said “cause” requires a reason beyond mere policy disagreements that bears on a person’s ability and fitness to do the job.

    Cook is the latest Democratic appointee targeted for removal by the president as Mr. Trump seeks to stretch the bounds of executive authority. Since he returned to the White House in January, Mr. Trump has moved to oust members of various independent agencies tapped by his predecessor, including officials at the National Labor Relations Board, Merit Systems Protection Board, Consumer Product Safety Commission and Federal Labor Relations Authority, among others.

    Many of his attempted firings have sparked legal battles, and the Supreme Court in some of those cases has allowed the removals to take effect while litigation continues. But in one of those challenges, brought by terminated members of the NLRB and MSPB, the high court suggested that the Fed is different from those other agencies.

    The Supreme Court called the central bank a “uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States,” the 18th- and 19th-century central bank predecessors of the Fed.

    Melissa Quinn

    Melissa Quinn is a politics reporter for CBSNews.com. She has written for outlets including the Washington Examiner, Daily Signal and Alexandria Times. Melissa covers U.S. politics, with a focus on the Supreme Court and federal courts.

    [ad_2]

    Source link

  • Trump’s “unprecedented” firing of Fed Governor Lisa Cook raises untested questions

    [ad_1]

    Washington — President Trump’s attempt to fire Lisa Cook as a member of the Federal Reserve Bank’s Board of Governors puts the nation in uncharted legal waters, and may ultimately be up to the Supreme Court to provide clarity on whether the move crosses a legal boundary, legal scholars expect.

    Mr. Trump’s move to oust Cook comes after months of griping about the Fed, which he says is moving too slowly to cut interest rates. But if her removal is allowed to stand — a question that will be decided by the courts — and the Senate confirms a replacement, it would mean Mr. Trump will have appointed the majority of the seven-member Board of Governors.

    Cook was named to the Fed Board by President Joe Biden in May 2022 and reappointed to serve a full 14-year term in September 2023, which is set to end in January 2038.

    Mr. Trump said he was removing Cook from her post because of alleged mortgage fraud, though she has not been charged with any civil or criminal offense. The claims about Cook were made by Bill Pulte, the Trump-appointed director of the Federal Housing Finance Agency, who sent a letter to Attorney General Pam Bondi accusing Cook of  taking out mortgages for properties in Michigan and Georgia in 2021 and claiming both would be used as her primary residence.

    Pulte alleged that Cook was fraudulently attempting to gain more favorable lending terms. He has also leveled allegations of mortgage fraud against California Sen. Adam Schiff and New York Attorney General Letitia James, two Democrats who have been among the most prominent opponents of Mr. Trump. Both have denied the accusations.

    In a statement released through the Fed last week, Cook said, “I do intend to take any questions about my financial history seriously as a member of the Federal Reserve and so I am gathering the accurate information to answer any legitimate questions and provide the facts.”

    Mr. Trump’s move to fire Cook has set off a legal battle that could end with the Supreme Court, which has a 6-3 conservative majority. She filed a lawsuit Thursday challenging what the suit said is Mr. Trump’s “unprecedented and illegal attempt to remove Governor Cook from her position which, if allowed to occur, would [be] the first of its kind in the Board’s history.”

    “It is clear from the circumstances surrounding Governor Cook’s purported removal from the Federal Reserve Board that the mortgage allegations against her are pretextual, in order to effectuate her prompt removal and vacate a seat for President Trump to fill and forward his agenda to undermine the independence of the Federal Reserve,” her complaint, filed in federal district court in Washington, D.C., states. 

    The White House has defended Mr. Trump’s move to terminate Cook from the Fed Board of Governors as within his lawful authority.

    “The president determined there was cause to remove a governor who was credibly accused of lying in financial documents from a highly sensitive position overseeing financial institutions,” White House spokesman Kush Desai said in a statement. “The removal of a governor for cause improves the Federal Reserve Board’s accountability and credibility for both the markets and American people.”

    Aggressive removals

    Mr. Trump’s move to fire Cook is the latest in a string of removals of Democratic-appointed members of independent agencies, which have tested the bounds of his executive authority. He fired leaders of the National Labor Relations Board and the Merit Systems Protection Board, ousted commissioners on the Consumer Product Safety Commission and terminated officials sitting on the National Transportation Safety Board and Federal Labor Relations Authority.

    Many of the firings have led to legal challenges. The officials removed from the boards have argued Mr. Trump violated federal laws that shield them from being removed at-will. Instead, Congress has said that the only grounds for their firings are inefficiency, neglect of duty or malfeasance in office. The laws were meant to insulate independent federal agencies and decisions from political pressure.

    The law establishing the Federal Reserve System, known as the Federal Reserve Act, specifies that the president can only remove a member of its Board of Governors “for cause.” But courts have said little about what may constitute “cause.” While not defined in the Federal Reserve Act, Cook argues in her lawsuit that it means instances of inefficiency, neglect of duty, malfeasance in office or comparable misconduct. 

    The question of what qualifies as good cause, and whether Cook’s alleged actions rise to it, are likely to be key questions to be answered during litigation, said Adam White, a senior fellow at the American Enterprise Institute who focuses on the Supreme Court.

    “If [the justices] interpret good cause, they’ll have to do so with an eye to the power and purpose of the Federal Reserve System more generally, the powers of the system and the purpose of its independence. What is ‘good cause’ with respect to the service of a Fed governor?” he said. “If all President Trump is going to go with is these allegations regarding the governor’s mortgage application before she was on the board, I have a hard time believing that constitutes good cause because it’s really not germane to the duties of the governor while she was in office.”

    The Supreme Court and the Fed

    In a series of recent decisions, the Supreme Court has reasserted the president’s power to remove executive officers without cause.

    In 2020, the high court ruled that the structure of the Consumer Financial Protection Bureau — headed by a single leader removable only for inefficiency, neglect or malfeasance — was unconstitutional.

    Then, in a 2021 decision striking down the structure of the Federal Housing Finance Authority, the high court acknowledged that a “for cause” restriction in the 2008 Recovery Act “appears to give the president more removal authority than other removal provisions,” like those restricting removals to instances of inefficiency, neglect of duty or malfeasance in office. Still, it said that “the Constitution prohibits even ‘modest restrictions’ on the President’s power to remove the head of an agency with a single top officer.”

    This year, in response to emergency appeals brought by ousted officials from the NLRB and the MSPB, which are multi-member bodies, the Supreme Court allowed Mr. Trump to fire those officials while their legal challenges move forward, even though Congress shielded them from being removed at will. But in a brief decision in that case that appeared to be 6-3, the Supreme Court’s majority singled out the Fed.

    Two fired officials, Gwynne Wilcox and Cathy Harris, raised concerns about the consequences of allowing their removals and whether that would call into question the constitutionality of the Fed’s for-cause removal protections. The court said it disagreed. Instead, it called the central bank a “uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States,” the 18th- and 19th-century central bank predecessors of the Fed.

    Writing in dissent, Justice Elena Kagan said the majority created a “bespoke Federal Reserve exception,” even though its independence “rests on the same constitutional and analytic foundations as that of the NLRB, MSPB, FTC, FCC, and so on.”

    “The court in that language does not resolve the question. All the court is saying is that the Federal Reserve is different from the FTC or from the NLRB,” Joel Alicea, a law professor at the Catholic University of America, said. “Yeah, it is different, but is it sufficiently different to mean that it’s not subject to the same rule? The court doesn’t say.”

    The president’s removal powers

    While Mr. Trump has sought to exert new levels of control over the executive branch, the Supreme Court has recognized narrow exceptions to the removal powers, allowing Congress to protect certain officials from being fired without cause.

    In a 1935 decision in the case Humphrey’s Executor v. United States, the court found that Congress can restrict the president’s authority to remove multi-member commissions of experts who are balanced along partisan lines and do not exercise any executive power.

    In its decision allowing the firings of the labor board members, the Supreme Court’s majority said the Justice Department “is likely to show that both the NLRB and MSPB exercise considerable executive power.”

    But White said the Fed is different from those agencies because of the authority it exerts.

    “Under the last 15 years of precedents, the question is what kind of powers does the agency wield and are they substantially executive?” he said. “And for the Fed, it does have regulatory powers and it’s possible they verge on something like executive power, but the overwhelming majority of what the Fed does that is of consequence is its monetary powers. That’s why the court recognized that the Fed is different.”

    White continued: “The whole reason why we’re sensitive about the president’s attacks on the Fed versus the NLRB is that the Fed’s overwhelming purpose and its most significant power are all something very different than simple law enforcement policy. Those powers, going back to the very beginning of the country, have never been treated as executive powers.”

    Alicea, however, disagreed. The Board of Governors has broad oversight and regulatory authority over the nation’s banking system, he said.

    “Those are core executive powers,” he said.

    Melissa Quinn

    Melissa Quinn is a politics reporter for CBSNews.com. She has written for outlets including the Washington Examiner, Daily Signal and Alexandria Times. Melissa covers U.S. politics, with a focus on the Supreme Court and federal courts.

    [ad_2]

    Source link

  • Trump clashes with Fed board member Lisa Cook, pushing to oust her

    [ad_1]

    A standoff is brewing between President Trump and economist Lisa Cook. Mr. Trump tried to fire her, claiming “there is sufficient cause” to believe that Cook made false statements on one or more mortgage agreements. Cook fired back that “President Trump has no authority to remove her” from the independent Federal Reserve and vowed to file suit. Nancy Cordes reports.

    [ad_2]

    Source link

  • Trump’s move to fire Fed governor Lisa Cook could give him leverage over Fed board, analysts say

    [ad_1]

    President Trump’s move to fire Federal Reserve governor Lisa Cook could roil financial markets, raise uncertainty for investors and heighten concerns that the White House is trying to wrest control of the historically independent central bank, according to Wall Street analysts. 

    Mr. Trump announced her removal in a letter posted Monday night on Truth Social, citing allegations that she had engaged in mortgage fraud. 

    Cook denies Mr. Trump has the legal authority to fire her and pledged on Tuesday not to resign. “I will continue to carry out my duties to help the American economy as I have been doing since 2022,” she said in a statement. Cook’s lawyer also vowed to fight the firing in court. 

    Asked by CBS News chief White House correspondent Nancy Cordes on Tuesday whether the Trump administration is effectively weaponizing government by digging into the mortgage records of public officials, Mr. Trump responded, “No. They’re public.”

    Cook has not been charged with a crime. Federal Housing Finance Agency head Bill Pulte, who leveled the initial accusations against Cook, has called on the Department of Justice to investigate Cook. 

    Cook was appointed to a 14-year term on the Fed’s Board of Governors in 2022 and also serves on the Federal Open Market Committee (FOMC), which sets short-term interest rates in the U.S. 

    A Federal Reserve spokesperson said in a statement Tuesday that the central bank will “continue to carry out its duties as established by law.” The Fed also pointed to Cook’s statement that she plans to contest her firing in court and said it “will abide by any court decision.”

    “Congress, through the Federal Reserve Act, directs that governors serve in long, fixed terms and may be removed by the president only ‘for cause.’ Long tenures and removal protections for governors serve as a vital safeguard, ensuring that monetary policy decisions are based on data, economic analysis, and the long-term interests of the American people,” the Fed said.

    More influence over the Fed?

    Financial markets were subdued on Tuesday in digesting Mr. Trump’s effort to oust Cook. Yet the decision was the talk of Wall Street, with multiple analysts saying Cook’s dismissal could open the door to Mr. Trump gaining control of the Fed’s seven-member board. 

    “President Trump’s decision to fire Lisa Cook as a Fed governor gives him the ability to gain a majority at the Federal Reserve Board and to influence the broader composition of the FOMC,” Jaret Seiberg, an analyst with TD Securities, said in a report to investors, referring to the central bank’s rate-setting panel.

    The White House didn’t respond to a request for comment on whether firing Cook could impact financial markets and compromise the Fed’s independence. 

    Mr. Trump has also nominated Stephen Miran, who heads the White House’s Council of Economic Advisers, to serve on the Fed board. Mr. Trump is slated to name a nominee to succeed Fed Chair Jerome Powell whose term ends in May of 2025; Powell is scheduled to continue serving on the Fed board until January of 2028 and could continue to serve in that role after stepping down as Fed chair. 

    If Cook were to leave the Fed board, Mr. Trump could ultimately end up with five appointees on the panel by mid-2026, giving the White House more leverage to influence monetary policy, according to investment advisory firm Capital Economics. 

    During a meeting Tuesday, Mr. Trump demurred when asked by a reporter who he’s considering to replace Cook on the Fed board. “We’ll have a majority very shortly so that will be great,” he said.

    Mr. Trump has repeatedly assailed Powell for the central bank’s decision to hold off in cutting interest rates, with policy makers remaining cautious about reducing borrowing costs so long as inflation remains above the Fed’s 2% target. Powell signaled last week that a rate cut could be on the horizon during a speech at the Jackson Hole, Wyoming, economic symposium.

    No guarantee of lower interest rates

    The 12-member FOMC is made up of seven members of the Fed Board of Governors; the president of the Federal Reserve Bank of New York; and four of the 11 Fed bank presidents, who serve on a rotating basis for one-year terms. 

    That interlocking relationship suggests that even stacking the Fed board with loyalists wouldn’t guarantee the interest rate cuts that Mr. Trump has demanded, Gregory Daco, chief economist at strategy consulting firm EY-Parthenon, told CBS MoneyWatch.

    “It’s not just about the administration nominating individuals and Congress confirming those individuals — it’s also about how these individuals perceive their role and value their independence,” he said.

    Analysts with Capital Economics noted that Mr. Trump’s appointees would need to persuade other FOMC members about setting monetary policy in ways that align with the White House’s economic objectives. That “could be difficult if those others felt compelled to defend the Fed from political attacks,” they said in a report. 

    For decades, investors have seen the Fed as a generally neutral arbiter guided by its mandate to keep inflation in check and the job market humming. As a result, any perception that Mr. Trump is undermining the Fed’s autonomy could rattle markets, according to Nigel Green, CEO of global financial advisory firm deVere Group.

    “Investors are reacting because the independence of the central bank is critical to market stability, and any sign of political capture raises alarm bells everywhere,” Green said in an email. 

    Meanwhile, the question of whether Cook can be removed from the Fed board remains unresolved. Under the Federal Reserve Act of 1913, the president has authority to remove Fed appointees before their term ends, but only for “cause.” Analysts said the legal dispute over Cook’s removal could wind up in the Supreme Court.

    “The situation is extremely fluid,” Daco said. “So until we get some clarity as to the exact conviction, you’re not necessarily going to see much significant movements in markets.”

    Mary Cunningham

    Mary Cunningham is a reporter for CBS MoneyWatch. Before joining the business and finance vertical, she worked at “60 Minutes,” CBSNews.com and CBS News 24/7 as part of the CBS News Associate Program.

    [ad_2]

    Source link

  • Trump says he’s fired Federal Reserve board member Lisa Cook

    [ad_1]

    President Trump said Monday he has fired Lisa Cook from the Federal Reserve’s Board of Governors — a dramatic move after months of public attacks against the central bank.

    The president announced Cook’s removal from the Fed board in a letter posted to Truth Social that accused Cook of making false statements on mortgage documents, actions he claimed were “gross negligence” and “potentially criminal.” Mr. Trump had previously urged Cook to resign, leading the economist to say she had “no intention of being bullied to step down from my position because of some questions raised in a tweet.”

    The move is an early test of Mr. Trump’s power to terminate members of the Federal Reserve. Under federal law, Fed board members serve for 14-year terms and can only be fired by the president “for cause.” Cook has served on the Fed since 2022, and her current term runs until 2038.

    Mr. Trump wrote in a letter to Cook: “I have determined that there is sufficient cause to remove you from your position.”

    CBS News has reached out to Cook and the Fed for comment.

    What are President Trump’s allegations against Lisa Cook?

    The allegations against Cook were leveled earlier this month by Federal Housing Finance Agency Director Bill Pulte, who has positioned himself as an ally of Mr. Trump’s. Pulte sent a letter to Attorney General Pam Bondi accusing Cook of taking out mortgages for homes in Michigan and Georgia in 2021, and telling banks in both cases that she planned to use the homes as her primary residences — in what Pulte alleged was a fraudulent attempt to gain more favorable lending terms.

    Last week, Mr. Trump posted on Truth Social: “Cook must resign, now!!!”

    Cook said in a statement released through the Fed: “I do intend to take any questions about my financial history seriously as a member of the Federal Reserve and so I am gathering the accurate information to answer any legitimate questions and provide the facts.”

    Pulte has also made mortgage fraud allegations against California Sen. Adam Schiff and New York Attorney General Letitia James, two Democratic officials and Trump foes who denied the accusations. Notably, James’s office sued Mr. Trump and his company for loan fraud before his return to the White House, securing an almost $400 million civil court judgment that was tossed out by a New York state appellate court last week.

    Why is President Trump angry at the Fed?

    Cook’s firing came after Mr. Trump spent months attacking the Federal Reserve and its chair, Jerome Powell, over the central bank’s handling of interest rates.

    Cook, Powell and 10 other Fed officials sit on a committee that controls the nation’s monetary policy and sets target interest rates, with a dual mandate of keeping inflation low and employment levels high. This work is typically done independently, with little to no input from political leaders.

    The Fed hiked interest rates to decades-long highs in 2022 and 2023 in a bid to quell inflation. After some cuts last year, the central bank has chosen to leave rates at relatively high levels so far this year, fearing that inflation could come roaring back or that Mr. Trump’s tariff strategy could cause consumer prices to jump. The trade-off is that higher interest rates can lead to slower economic growth, and they make it more expensive for American consumers and businesses to borrow.

    Mr. Trump has lashed out over this strategy, nicknaming Powell “Too Late.” The president has floated the idea of firing Powell, in some cases accusing him of mismanaging a project to renovate the Fed’s headquarters. 

    Powell hinted last week that interest rate cuts could be on the horizon, as the Fed tries to prevent inflation from spiking without triggering higher unemployment. During a speech in Jackson Hole, he said the Fed will “proceed carefully,” but recent shifts “may warrant adjusting our policy stance.”

    Even without firings, the president could reshape the Fed board as positions open up. If the Senate confirms Mr. Trump’s replacements for Cook and another Biden nominee who stepped down early, four of the Fed’s seven governors will be Trump appointees — making up most of the Fed’s board of governors and one-third of the 12-member interest rate-setting Federal Open Market Committee.

    Currently, just two Fed board members are Trump picks, both from his first term: Powell and board member Christopher Waller.

    Mr. Trump is widely expected not to appoint Powell to another four-year term as Fed chair when his current one ends in May 2026, though he hasn’t announced a successor yet. Meanwhile, Mr. Trump has nominated his economic adviser Stephen Miran to serve on the Fed board until January 2026, replacing Adriana Kugler, the Biden appointee who left the board earlier this month. It’s unclear who he will pick to replace Cook.

    Joe Walsh

    Joe Walsh is a senior editor for digital politics at CBS News. Joe previously covered breaking news for Forbes and local news in Boston.

    [ad_2]

    Source link

  • Stock futures tilt up ahead of Fed chief Jerome Powell’s Jackson Hole speech

    [ad_1]

    U.S. stock futures inched higher Friday as investors await news out of Jackson Hole, Wyoming, where Federal Reserve Chair Jerome Powell is set to speak later this morning.

    S&P 500 futures were up 15 points, or 0.2%, as of 8:55 a.m. EST, while Dow Jones Industrial Average futures added 140 points, or 0.3%. Tech-heavy Nasdaq Composite futures were up 0.2%.

    World shares were mixed, in response to a drop in Walmart stock Thursday and as investors eagerly hope for signs of a rate cut from the Fed.

    Traders will be eyeing Fed Chair Powell’s speech at the Jackson Hole economic forum to see if he hints at a potential rate cut at the central bank’s next meeting, which is scheduled for Sept. 17. The central leader is expected to speak at 10 a.m. at the event hosted by the Federal Reserve Bank of Kansas City.

    While Powell will likely touch on economic trends on Friday, he’s expected to keep the question of a Fed rate cut close to his chest.

    So far this year, the 12-member Federal Open Market Committee (FOMC) which Powell serves as the chairman of, has held off on a rate cut, maintaining a cautious approach as it continues to assess the impact of the Trump administration’s tariffs. That’s despite pressure from President Trump, who has repeatedly urged the central bank leader to lower rates.

    The Federal Reserve is tasked with keeping inflation in check while also maintaining maximum employment — a challenging mandate in light of the recent slowdown in job growth and signs that the president’s tariffs may be starting to drive up prices. The Consumer Price Index in July rose 2.7% on an annual basis, slightly cooler than economists’ forecasts, but still above the Fed’s 2% target.

    “What is critical in Fed Chair Powell’s speech today is how confident he is that inflation is moving down toward the Fed’s 2% inflation target,” Apollo Chief Economist Torsten Slok  said in a research note on Friday.

    The Associated Press

    contributed to this report.

    Mary Cunningham

    Mary Cunningham is a reporter for CBS MoneyWatch. Before joining the business and finance vertical, she worked at “60 Minutes,” CBSNews.com and CBS News 24/7 as part of the CBS News Associate Program.

    [ad_2]

    Source link

  • Closing This Gap May Be Biden’s Key to a Second Term

    Closing This Gap May Be Biden’s Key to a Second Term

    [ad_1]

    Just since last November, the most closely watched measure of consumer confidence about the economy has soared by about 25 percent. That’s among the most rapid improvements recorded in years for the University of Michigan’s Index of Consumer Sentiment, even after a slight decline in the latest figures released yesterday.

    And yet, even as consumer confidence has rebounded since last fall, President Joe Biden’s approval rating has remained virtually unchanged—and negative. Now, as then, a solid 55 percent majority of Americans say they disapprove of his performance as president in the index maintained by FiveThirtyEight, while only about 40 percent approve.

    That divergence between improving attitudes about the economy and stubbornly negative assessments of the president’s performance is compounding the unease of Democratic strategists as they contemplate the impending rematch between Biden and former President Donald Trump. Most Democratic strategists I spoke with believe that brightening views about the economy could still benefit Biden. But many also acknowledge that each month that passes without improvement for Biden raises more questions about whether even growing economic optimism will overcome voters’ doubts about him on other fronts.

    Read: The real reason Trump loves Putin

    Doug Sosnik, the chief White House political adviser to Bill Clinton during his 1996 reelection, told me that if he was in the White House again today, “I would say I’m not that concerned” about improving economic attitudes not lifting Biden yet, “because this takes time.” But, Sosnik added, “if you come back to me in six weeks or two months and we haven’t seen any movement, then I’d start becoming very concerned.”

    Historically, measures of consumer confidence have been a revealing gauge of an incumbent president’s reelection chances. Presidents Ronald Reagan, Clinton, and Barack Obama, as I’ve written, all saw their job-approval ratings tumble when consumer confidence fell early in their first terms amid widespread unease over the economy. But when the economy revived and consumer confidence improved later in their term, each man’s approval rating rose with it. Riding the wave of those improving attitudes, all three won their reelection campaigns, Reagan in a historic 49-state landslide.

    By contrast, when Presidents Jimmy Carter and George H. W. Bush lost their reelection bids, declining or stagnant consumer confidence was an early augur of their eventual defeat. Collapsing consumer confidence amid the coronavirus pandemic in 2020 also foreshadowed Trump’s defeat, after sustained optimism about the economy had been one of his greatest political strengths during his first three years.

    Read: Biden Is still the Democrats’ best bet for November

    Polling leaves little doubt that since last fall, more Americans are starting to feel better about the economy. An index of economic attitudes compiled by the Gallup Organization recently reached its highest level since September 2021. Even after the small retreat in the latest numbers, the University of Michigan’s index is now at its highest level since the summer of 2021. A separate consumer-confidence survey conducted by the Conference Board, a business group, also slipped slightly in February but remains higher than its level last fall.

    None of this, though, has yet generated any discernible improvement in Biden’s standing with the public. In fact, the recent Gallup Poll that documented the rise in economic optimism since last October found that Biden’s approval rating over the same period had fallen, from 41 to 38 percent—a single percentage point above the lowest mark Gallup has ever measured for him. The fact that consumer confidence has revived without elevating Biden’s ratings suggests “that impressions of his economic handling have been set and will likely be hard to change as he faces other struggles with perceptions of age and capacity,” the Republican pollster Micah Roberts told me.

    Paul Kellstedt, a political scientist at Texas A&M University, told me that two big structural shifts in public opinion help explain why Biden has not benefited more so far from these green shoots of optimism.

    One, Kellstedt said, is that the relationship is weakening between objective economic trends and consumer confidence. Compared with the days of Reagan or Clinton, more voters in both parties are reluctant to describe even a booming economy in positive terms when the other party holds the White House, Kellstedt noted. Given Biden’s record of overall economic growth and job creation, as well as the dramatic rise in the stock market, the consumer-confidence numbers, though improving, are still lower “than they should be based on objective fundamentals,” he told me.

    Still, optimism about the economy has increased since last fall, not only among Democrats but also among independents and even Republicans, trends that have lifted previous presidents. That points to what Kellstedt calls the second structural challenge facing Biden: The relationship between voters’ attitudes about the economy and their judgments about the president is also weakening.

    Amid these new patterns in public opinion, “a strengthening economy is not going to hurt Biden, of course, but how much it is going to help him is quite uncertain,” Kellstedt told me.

    Political strategists in both parties believe another central reason Biden isn’t benefiting more from the many positive economic trends under his presidency is that so many Americans remain scarred by the biggest exception: the highest inflation in four decades. Although costs aren’t rising nearly as fast as they were earlier in Biden’s presidency, for many essentials, such as food and rent, prices remain much higher than when he took office.

    Jay Campbell, a Democratic pollster who also surveys economic attitudes for CNBC, told me that more than anything else, “what is holding back” Biden from rising is that “it is still well within your memory when you were spending at the grocery store 10 to 20 percent less than you are now.”

    Republicans see a related factor constraining Biden’s potential gains: The baseline that voters are comparing him against is not in the distant past, but what they remember from the Trump presidency before the pandemic. Even though the University of Michigan’s consumer-confidence index and Gallup’s Economic Confidence Index have improved substantially since last year, for instance, in absolute terms they still stand well below their levels during Trump’s first three years. “There’s an alternative economic approach that voters can remember and compare to the years under Bidenomics,” Roberts told me. Jim McLaughlin, a pollster for Trump’s 2024 campaign, told me voters don’t credit Biden for moderating inflation largely because they blame him for causing it in the first place.

    A silver lining in all this for Biden is that, as Kellstedt noted, voters’ judgments about which candidate can better manage the economy don’t determine their preferences in the presidential race as much as they once did. Today, as I’ve written over the years, the two political coalitions are held together more by shared cultural values than by common economic interests.

    As recently as the 2022 election, Democratic House candidates not only carried the small share of voters who described the economy as good, but also won more than three-fifths of the much larger group who called it only fair, according to exit polls. That was primarily because a historically large number of voters down on the economy, and Biden’s performance, nonetheless rejected Republican candidates whom they viewed as a threat to their rights (particularly on abortion), their values, and democracy itself. That same dynamic will undoubtedly help Biden in 2024, particularly among upper-middle-class voters who have felt less strain over inflation, are most likely to be benefiting from the stock market’s surge, and are the most receptive to Democratic charges that Trump will threaten democracy and their personal freedoms.

    But Biden also has plenty of his own vulnerabilities on noneconomic issues. Not only Republicans but also independents give him dismal ratings for his handling of immigration and the border. His expansive support of Israel’s war against Hamas has deeply divided the Democratic coalition. And a broad consensus of voters, now often about 80 percent or more in polls, worry that Biden is too old for another term. If attitudes about the economy continue to mend, and Biden’s approval remains mired, “the stories that will be written is that voters have tuned him out, they’ve made their minds up, he’s too old,” Sosnik told me.

    Trump inspires such intense resistance that Biden, in a rematch, is virtually certain to win more support than any modern president from voters who are pessimistic about the economy. But that doesn’t mean Biden can overcome any deficit to Trump on the economy, no matter how large. And that deficit right now is very large: In national polls released last month by both NBC News and Marquette University Law School, voters trusted Trump over Biden for handling the economy by about 20 percentage points.

    At some point, the strategists I spoke with agree, the economic hole could become too deep to climb from by relying on other issues. (Both the NBC and Marquette polls showed Biden running much closer to Trump in the ballot test than on the economy—but still trailing the former president on the ballot test.) To overtake Trump, Biden likely needs twin dynamics to continue. He needs the slight February pullback evident in the University of Michigan and Conference Board surveys to prove a blip, and the share of Americans satisfied with the economy to continue growing. And then he needs more of those satisfied voters to credit him for the improvement.

    Biden has some powerful arguments he can marshal to sell voters on his economic record. Wages have been rising faster than prices since last spring, particularly for low-income workers. The big three economic bills Biden passed in his first two years have triggered an enormous investment boom in new manufacturing plants for clean energy, electric vehicles, and semiconductors, with the benefits flowing disproportionately toward smaller blue-collar communities largely excluded from the tech-heavy information economy. He can also point to significant legislative achievements that are helping families afford prescription-drug and health-care costs—a potentially powerful calling card, especially with seniors. If the Federal Reserve Board cuts interest rates by this summer—which it has signaled it will do if inflation remains moderate—that could turbocharge the improvement in consumer confidence.

    “There is so much other good news that I feel like there’s a case to be made to people that this president has substantially improved the economy,” Campbell told me. “But whether that ultimately supersedes people’s negativity about [inflation] is a question that I don’t have an answer to.”

    Biden still has time to improve his standing on the economy, but that time isn’t unlimited. Sosnik says history has shown that voters solidify their judgments about a president’s performance in the period between the second half of his third year in office and the first half of his fourth year, about four months from now. President John F. Kennedy, speaking about the economy, famously said, “A rising tide lifts all boats.” The next few months will reveal whether Biden’s has run aground too deeply for that still to apply.

    [ad_2]

    Ronald Brownstein

    Source link