Will the Fed be allowed to do its job?

Fed independence by finding a way to distinguish it from other agencies over which the president has asserted a right to remove “principal” officers at will. Regardless of the outcome of litigation over the attempt to remove Fed Governor Lisa Cook, though, the central bank’s independence already has been significantly impaired.For example, Trump has asserted that all interpretations of law and review of agency expenditures, including by the Fed, fall within the purview of the White House and Justice Department.

The administration also has taken control of all Fed regulatory policy, including its oversight of bank capital and leverage. The White House may claim that its control does not apply to the institution’s conduct of monetary policy, but this is a distinction without much difference.Banks, by their very design, are in the business of creating and pricing money and credit.

In a sense, they are to the Fed what franchisees are to McDonald’s. Bank regulations—leverage ratios, capital requirements, reserve requirements—are all related to the availability of money and credit in the economy.

Key tools at the core of monetary policy—interest on reserves, the discount window primary credit rate, and so forth—generally are produced through legal rules voted on by the Fed’s board. How will the White House treat other tools, such as international swap lines, overnight reverse repo agreements, primary dealer arrangements, and the availability of master accounts?Moreover, in an extraordinary turn, the chair of the White House Council of Economic Advisers, Stephen Miran, has been confirmed to the Fed board while merely on leave from the president’s team.