The strategic maneuvering around the Federal Reserve's personnel structure has escalated significantly following a recent U.S. Supreme Court ruling on a related dispute. Despite the court permitting Governor Lisa Cook to remain in her role while her case is adjudicated, the Trump administration and its allies are not slowing their efforts. Instead, they are actively exploring further pathways to alter the composition of the central bank's leadership.
Insiders reveal that the White House, along with external supporters, is seeking viable options to potentially remove certain sitting governors. This would create vacancies, allowing the President to nominate more individuals aligned with his policy preferences. These sources indicate that Lisa Cook remains a primary target, while former Chair Jerome Powell is also under consideration within these plans.
While the Supreme Court's ruling emphasized the Fed's institutional independence from the executive branch, some observers note the decision was based on "narrow legal grounds." This leaves the door open for potential future political interventions. According to those familiar with the matter, Trump's camp views the ruling as a procedural guide, believing they can refine their approach and relaunch removal efforts.
In a Thursday interview, Trump himself stated the court focused on process over the case's merits, and his administration would continue its steps. "We are going to start the process, and we are going to have a perfect process and a perfect procedure," he said.
Beyond the Board of Governors, vacancies in the regional Federal Reserve Banks are seen as another potential avenue. Sources say Treasury Secretary Scott Bessent is leveraging his network to vet candidates, with particular focus on the presidency of the Atlanta Fed. This role is viewed as crucial by Trump's economic team due to the Atlanta Fed's influential analysis on areas like economic growth and its upcoming rotation into a voting seat on interest rate decisions in 2027.
Since his return to the White House in 2025, Trump has maintained pressure on the Fed, notably criticizing Jerome Powell for not moving more quickly to cut interest rates. He has publicly discussed removing Powell and expressed a clear desire for a successor more aligned with his economic views. Kevin Warsh, who ultimately became Fed Chair, echoed Trump's stance on lower rates before his nomination.
However, shifting inflation dynamics are dampening expectations for rate cuts. Projections released in June show about half of Fed officials believe a rate hike may be necessary in 2026, with some regional bank presidents expressing heightened vigilance about the inflation outlook.
White House spokesperson Kush Desai did not directly address personnel questions, stating only that the administration has full confidence in Chair Warsh. He said the administration's supply-side policies are cooling inflation and paving the way for rate cuts, despite temporary energy market disruptions.
The Treasury Department did not respond to requests for comment.
The Powell Tenure Dispute
Multiple sources close to the President indicate Trump is dissatisfied that Jerome Powell chose to remain on the Board as a Governor after his term as Chair ended. This displeasure was compounded in late May when Powell received the John F. Kennedy Profile in Courage Award for his stewardship of the Fed. In his acceptance, he praised Congress for insulating monetary policy from political pressure, a remark that further irritated the White House.
White House National Economic Council Director Kevin Hassett voiced concerns this week, stating on Fox Business that he is worried about Jay Powell staying. He suggested many votes within the Fed might be driven by a desire to oppose Trump rather than patriotism.
Traditionally, most Fed Chairs depart after their term, but Powell opted to stay, with his Governor term lasting until 2028. He previously indicated he would keep a low profile but decided to continue serving amid ongoing legal pressure from the administration.
Part of this pressure stems from a Justice Department investigation into a costly headquarters renovation project at the Fed, which ran significantly over budget. Powell views this probe as a consequence of the Fed not adjusting interest rates as the government preferred. An Inspector General report on the project is expected later this month.
Although U.S. Attorney Jeanine Pirro for the District of Columbia stated in April she would close the investigation, she noted her office would review the IG report, leaving open the possibility of its revival. Sources say Trump's team is looking to use this report or other means to find justification for further action.
Cook and Regional Fed Strategy
Lisa Cook, a Governor appointed during the Biden administration, also remains under scrutiny. Last August, Trump attempted to remove her, citing alleged mortgage fraud, which Cook denied. She sued to block the removal, a case that ultimately reached the Supreme Court.
A majority of Justices ruled on Monday that she could stay in her role while the case proceeds. Chief Justice John Roberts noted the ruling was based on "narrow grounds," as Trump had not afforded Cook sufficient process to respond to the allegations.
Following the ruling, Trump and his allies quickly signaled they would continue their removal attempts. Since the court did not rule on whether the allegations themselves were sufficient grounds for removal, any future action could still face fresh judicial review.
Simultaneously, personnel changes within the regional Fed system are advancing. Sources indicate the administration is closely watching the selection process for the Atlanta Fed president, seen by allies as a key opportunity to install a like-minded individual. The position is chosen by a local board and requires approval from the Washington-based Board of Governors, with the president rotating into a vote on rate decisions.
The role has been vacant since Raphael Bostic departed in February, having announced his decision in November 2025. During his tenure, he frequently voiced clear concerns about inflation risks.
Sources say the selection process was in advanced stages by May but was paused on the advice of then-Vice Chair for Supervision Michelle Bowman and then-Governor Stephen Miran—both Trump appointees—so that incoming Chair Warsh could participate in the final decision. The process has now restarted, with two sources indicating Warsh is leaning toward candidates with private-sector executive experience.
In response to queries, the Atlanta Fed reiterated a June statement from its board chairman, Greg Haile, who emphasized the focus on selecting the best candidate while protecting the integrity of the process.
Trump Says Warsh Faces a Potentially 'Hostile' Board
Following the release of weaker-than-expected June jobs data, the direction of U.S. monetary policy is again in focus. The report showed hiring slowed significantly, and while the unemployment rate fell to 4.2%, overall job momentum weakened. This prompted markets to adjust expectations, reducing bets on a rate hike this year.
Against this backdrop, Trump commented on the Fed's internal dynamics in his Thursday interview. He suggested that new Chair Kevin Warsh may not have full cooperation from the Board in advancing his preferred policies. "He has a board that may be a little bit hostile, you know, unfortunately, maybe a board that wants to do the wrong thing," Trump said.
When asked if the jobs report gave Warsh more room to cut rates, Trump praised Warsh's ability but highlighted constraints. He noted that while Warsh is a professional who knows where he wants to go, he must operate within the realities he faces.
The softening jobs data raises new questions about the U.S. economic outlook at a time when Trump is seeking to bolster his economic stewardship image ahead of the November midterm elections. Voters consistently cite high living costs, and while household spending remains somewhat resilient, wage growth has not kept pace with price increases.
A recent dip in gasoline prices has provided some relief to consumer sentiment, but confidence levels remain near historical lows. Trump campaigned on lowering prices, but persistent inflation is putting pressure on Republicans on economic issues.
Data shows inflation in May rose at its fastest pace in over three years. Many economists believe inflation may have peaked following a temporary deal with Iran and a subsequent drop in oil prices last month. However, uncertainty remains around longer-term diplomatic arrangements, and energy price shocks are still working through supply chains, suggesting prices for many goods could continue rising in the near term.
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