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00:00I'm joined now by someone who intimately understands the Fed was there for ten years and most recently was the Fed vice chair under Jay Powell, who is still now the chair. And that's, of course, Lael Brainard. Lael, thank you so much for joining us this morning. As we see this standoff between President Trump and Governor Cook, we have yet to hear from the Fed itself. What kind of response do you think we can expect from the institution? Well, I think the Federal Reserve is in an incredibly difficult position here. But you have to remember, this is not about an individual governor. This is really an unprecedented attack on the independence of the Federal Reserve as an institution. There is nobody in the Federal Open Market Committee, the monetary policy setting committee, that can't be thinking, well, what does this mean for me? And so any member of the board presumably is going to worry that they, too, could be subject to this kind of political pressure. And that fundamentally undermines the institutional independence of the Fed, which means higher inflation, potentially less credibility, even higher long term interest rates, bad for the economy. Do you think this can actually impact how members are thinking about monetary policy? Well, I just think the implication, if any member of that board could come under this kind of political pressure from the White House. And of course, we saw that kind of pressure on the chair earlier this year. I think that does really put a higher premium on whether they're going to be willing to speak their minds to dissent on key votes if necessary. I think it really does create unprecedented risks. The president in his letter talked about this mortgage allegation fraud in the mortgage world for Governor Cooke. What if she was charged or convicted? Well, I think what is important here is due process and undertaking a real investigation and having the facts on the table and the ability for her to defend herself legally. None of that has taken place here. The White House has pre-empted the process. And so that is why it's really unprecedented. It's very, very threatening to the very independence of the Federal Reserve. And it should cause concerns, I think, among investors and more broadly about that frontal fundamental underpinning of our strong economy and our strong financial markets. Given this is just about one individual. Does the Fed come out and say something or do they need to wait until that due process takes place? So the Federal Reserve as an institution is all about due process, and there have been individuals who have had investigations previously. There's a good process for doing that. That's not what's taking place here. This is really about trying to overturn the majority of the Board of governors long before any of these governors terms are up by threatening them with these kinds of investigations and firing without real due process and cause. And again, the Federal Reserve's independence really is at stake here. And that means that monetary policy will increasingly be overshadowed by concerns that there's political interference. Whether or not that is actually the case, if you think about it. Jay Powell, open the door for an interest rate cut in September. Very clearly that's exactly what the president wants. So monetary policy is actually moving his way. And yet this is a very, very aggressive attack on the Federal Reserve when monetary policy is is doing exactly what he's been calling for.

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Fed Independence Is Under Attack, Says Brainard

Lael Brainard, former Vice Chair of the Federal Reserve, says the independence of the Federal Reserve is under attack with President Donald Trump trying to fire Lisa Cook. Brainard says Cook deserves due process and firing Cook could hurt the economy. She speaks on "Bloomberg Surveillance." (Source: Bloomberg)

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