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- Connor Quincy via Fast Company
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- Politics·5 min to read
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Fed accountability push could counter Trump pressure, scholars argue
ReFed accountability push could counter Trump pressure, scholars argue
Scholars argue that making the Federal Reserve more accountable to Congress could strengthen its independence against political pressure, including from President Trump, who has pushed for rate cuts and sought to remove a governor.
The Federal Reserve, one of the most powerful institutions in the world, shapes the U.S. economy in ways that touch nearly every American, from mortgage rates to business hiring and the pace of economic growth. Yet critics on both the left and the right have long questioned whether the central bank is adequately accountable to the public. Now, as President Donald Trump continues to pressure the Fed to cut interest rates and attempts to oust a governor, scholars of central banking argue that a more accountable Fed could actually be a more defensibly independent one.
The debate over Fed accountability is not new. In 1978, amid record-high inflation and slow growth, Congress passed the Humphrey-Hawkins Act, requiring the Fed chair to report to lawmakers twice a year, creating a formal oversight channel that had not existed before. That same year, the Federal Banking Agency Audit Act gave the Government Accountability Office the authority to audit the Fed for the first time, though with a crucial carve-out: monetary-policy deliberations and transactions remained exempt to prevent short-term interest rate decisions from being derailed by political influence.
Despite those changes, the Fed remains an outlier among federal entities. It is self-financing through member bank capital, so its budget is independent of congressional appropriations. Its governors serve 14-year terms and can be removed only “for cause,” a far higher bar than the “at-will” standard Trump has used to reshape the federal bureaucracy. The Fed’s inspector general is appointed by the Fed chair, not by lawmakers or the president, making the watchdog part of the institution it oversees. Some critics have summarized this arrangement as “undersight” rather than oversight.
The accountability question has gained new urgency since the 2008 financial crisis, which triggered a historic expansion of the Fed’s activities. The central bank used emergency lending powers to inject liquidity into the economy, created special lending facilities for selected markets and institutions, and purchased trillions of dollars in bonds to lower longer-term interest rates, a policy known as quantitative easing. That policy was used again during the COVID-19 pandemic. At its peak in March 2022, the Fed’s balance sheet reached nearly $9 trillion, about 10 times larger than in 2007 and larger relative to GDP than at any time since World War II. As of August 2026, it has declined to about $6.7 trillion, still roughly seven times its pre-crisis peak.
The Fed’s crisis interventions have also blurred the traditional boundary between monetary and fiscal policy. Buying trillions of dollars in mortgage-backed securities to lower mortgage rates, supporting selected credit markets, and assuming certain financial risks can affect the distribution of wealth and the protection of specific sectors, tasks that would normally fall to lawmakers. Soon after the 2008 crisis, some economists, including current Fed Chair Kevin Warsh, argued that decisions with such major consequences deserved greater scrutiny. Warsh said in 2010 that the Fed’s bond-buying spree offered only short-term relief while opening up longer-term economic risks.
Warsh now faces these challenges as he delivers his first keynote speech at the annual Jackson Hole conference in Wyoming, which brings together global leaders from finance, economics, and policymaking. Although no policy moves are made at the conference, it gives policymakers a chance to compare notes and debate ideas privately. Trump has aggressively and consistently pressured the Fed to cut rates and is still trying to remove Fed Governor Lisa Cook, despite losing his case before the U.S. Supreme Court.
Scholars argue that accountability can mean different things: transparency about how decisions are made and who makes them, or retrospective evaluation of whether policies worked, what risks they created, and what they ultimately cost. Credible external scrutiny, they say, helps provide the democratic legitimacy for central bank independence. A more accountable Fed, they conclude, may ultimately be a more defensibly independent one.
