Lev Menand and Nathan Tankus on Why Fed Independence Is Now Hanging by a Thread
Last August, President Trump made the unprecedented choice of moving to fire Fed governor Lisa Cook. The administration claimed she was being terminated with cause, citing an ongoing investigation in alleged mortgage fraud committed by Cook. The legal battle between Cook and the administration has been tangled in the courts for the last year, eventually reaching the Supreme Court. This June, in a 5-4 decision, the court ruled in favor of Cook. However at the same time, in a different case, the court allowed the President to fire individual members of the FTC, undermining its role as quasi-independent body not beholden to the executive branch. So what are the implications here? How can the court change the status of a body like the FTC while allowing the Fed to continue operating as is? And for how long will the Fed maintain some amount of operational autonomy? On this episode we speak with Columbia Law School's Lev Menand who just wrote a piece on these two cases for Just Security called The Federal Reserve Exception to the Slaughter Rule as well as Nathan Tankus (writer and president of Notes on the Crises). The two of them lay out the consequences of these two decisions and they dig into the generations-long legal history, starting with Alexander Hamilton, that explains how we got here.
Read more: Can Trump Still Fire Lisa Cook After Her Supreme Court Win?
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Lev Menand on Trump's Attempt to Fire the Fed's Lisa Cook
Criticism and threats to Federal Reserve independence have been building for some time in this administration. But it was taken to a new height on August 25, when Trump posted that he intended to fire Fed Governor Lisa Cook, a Biden appointee. According to our guest, Columbia Law Professor Lev Menand, this is a big deal that has created an immediate crisis. The Trump administration's argument is that it's firing Lisa Cook "for cause" due to allegations (and these are just allegations at this point) that she committed mortgage fraud. As Lev argues, these allegations alone can't justify the removal of someone in this position. We talk through the legal implications, the immediate path ahead, and what may ultimately be Trump's real aim when it comes to pressuring the Fed.
Read more:
Trump Moves to Fire Fed’s Cook, Setting Up Historic Fight
Powell Opens Door to Interest Rate Cut, Citing Labor Markets
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The Growing Risk to Fed Independence That Wall St Isn't Watching
Last month, Donald Trump fired the Federal Trade Commission's two Democratic commissioners. They have since filed suit, arguing that the law that created the FTC — as well as a 90-year-old Supreme Court precedent — prevent the president from firing them without cause. And now, what might seem like a niche legal dispute could end up having much bigger consequences for other independent government agencies, including the Federal Reserve. That would be a huge shock for Wall Street, which tends to value central bank independence. In this episode, we speak with Lev Menand, professor at Columbia Law School and author of The Fed Unbound, to talk about the huge stakes involved in this case.
Read More:
Trump and the Fed Are on a Collision Course
Who Will Protect the Fed’s Independence? The Markets
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Lots More with Lev Menand on the Eurodollar Market Now
Odd Lots has been exploring the history of the eurodollar market in a special three-part series hosted by Columbia Law School's Lev Menand and the New York Fed's Josh Younger. But why should we care about the origins of this market at all? How do eurodollars fit into the global financial system right now? And what role do they play in maintaining the dollar's reserve currency status? In this episode, we bring back Lev to give an update on the modern eurodollar market. We discuss why some policymakers have been sounding the alarm and whether stablecoins are the new eurodollars.
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The Hidden History of Eurodollars, Part 3: Spinning Out of Control
In this special three-part series, Odd Lots is exploring the history of the eurodollar market. By the 1970s, eurodollars are hitting the headlines — and not in a good way. While this new form of money initially acted as a pressure valve for the Bretton Woods system, many now think the eurodollar market has spun out of control. What happens next — including Richard Nixon's decision to take the US off the gold standard — will not only shape the ultimate contours of today's eurodollar market, but will also give us the modern financial system itself. The story is told by Columbia Law School Professor Lev Menand and Federal Reserve Bank of New York Policy Advisor Josh Younger.
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US Aims to Tighten Flow of TSMC and Samsung Chips to China
Russian Crude Oil Piles Up Near Chinese Coast After US Sanctions
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The Hidden History of Eurodollars, Part 2: Defending the Dollar System
In this special three-part series, Odd Lots is exploring the history of the eurodollar market. As we enter the turbulent 1960s, the eurodollar market has grown big enough to catch the eye of regulators. The Federal Reserve mounts a fact-finding mission to better explore this rapidly-expanding market. And soon, policymakers have to decide just how helpful eurodollars can be when it comes to solidifying and expanding the greenback's role in international finance at a time when the gold-backed dollar is about to be put under massive pressure. The story is told by Columbia Law School Professor Lev Menand and Federal Reserve Bank of New York Policy Advisor Josh Younger.
Read more:
Trump Team Studies Gradual Tariff Hikes Under Emergency Powers
Canadian Ambassador Warns of ‘Tit-For-Tat’ Retaliation to US Tariffs
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The Hidden History of Eurodollars, Part 1: Cold War Origins
At more than $10 trillion outstanding, the eurodollar market is one of the biggest forms of shadow banking activity out there. It's also one of the most interesting markets in existence, allowing non-US banks to hold and lend offshore dollars that effectively sit outside of the Federal Reserve's control. But where did eurodollars actually come from? Why did the US allow these "shadow dollars" to exist at all? And what do eurodollars mean for the greenback's role in the global financial system? In this special three-part series, we look back at the hidden history of the eurodollar market. The story is told by Columbia Law School Professor Lev Menand and Federal Reserve Bank of New York Policy Advisor Josh Younger. We start in the aftermath of World War II, when Europe is in the midst of an expensive reconstruction and the world is in the early throes of the Cold War. It's here that the eurodollar is born.
Read more:
Russia Sanctions Arm Trump for Talks With Putin
Scholz Steps Up Criticism of Trump’s Expansionist Rhetoric
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The Regulatory Blunder That Gave Us the Silicon Valley Bank Disaster
Whenever a major financial institution collapses and needs a bailout, it's easy to say, "Where were the regulators?" But that's only a useful question if you can pinpoint the specific regulatory choices that led to any particular situation. So what caused Silicon Valley Bank to implode? On this episode of the podcast, we speak with Columbia Law School professor Lev Menand, who discusses the defanging of bank supervisors in the run-up to this fiasco. With proper oversight, someone might have caught and put a stop to the unique set of risks the bank was taking. But without proper oversight, they were encouraged to go for all-out growth, regardless of the ultimate social cost. We also discuss legislative changes over time that led to this buildup of risk.
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Younger and Menand Explain How We Got the Modern Banking System
The US financial system today is pretty much taken as a given. We have the Federal Reserve, which sets interest rates and provides various liquidity backstops. We have regulated banks, which lend and create money and have access to the Fed. And we have non-bank financial activity that falls under the nebulous umbrella of "shadow banking." But how did we actually end up with this system? And why did policymakers design it the way they did? On this episode, which was recorded live at Bloomberg's New York office on Nov. 29, we speak with Josh Younger and Lev Menand. They are research partners who have delved into the big questions about the structure of modern banking, the history that has shaped it into what it is today, and what its design actually means for the economy and society.
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