The Fed isn’t out of the woods yet. A bigger test is coming.

Subscribe to enjoy similar stories. In his second term, President Donald Trump has attacked Federal Reserve Chair Jerome Powell and his underlying institution with little impact on the markets. That may soon change as investors digest the administration’s criminal investigation into Powell for allegedly lying to Congress.

It is about time. For much of the past year, investors and commentators have put surprisingly little thought into the long-term implications of the president’s threats against the Fed, including his attempt to fire Fed governor Lisa Cook in August for alleged mortgage fraud, which she denies. This despite the potential for that case to create a legal path for Trump to fire other Fed governors and install his loyalists.

Complacent investors are either assuming the court will rule against the administration or crossing their fingers that Trump will restrain himself if he does win his case against Cook. The Justice Department issued subpoenas to Powell on Friday as part of an investigation into whether he allegedly lied to Congress. Yet if the court doesn’t strongly rule in favor of the Fed, investors will likely regret having given so little attention to this obvious risk.

To date, Trump in his second term has only had the opportunity to choose one of the seven voting members of the interest rate-setting Fed board, the uber-loyal Stephen Miran. Miran’s term ends this month. Not until Powell’s term as a governor ends in 2028 will Trump get another shot to appoint a voting governor.

So if Trump wants to make additional appointments, governors will have to resign or be fired for cause. Trump is edging for the latter. Ironically, the new criminal investigation into Powell is likely to diminish Trump’s ability