Lev Menand and Nathan Tankus on Why Fed Independence Is Now Hanging by a Thread

The Federal Reserve’s independence faces significant legal uncertainty following recent Supreme Court rulings that expanded presidential authority to remove heads of executive agencies. While the Court carved out a specific exception for the Fed based on a controversial interpretation of "history and tradition" linked to Alexander Hamilton, this protection rests on a fragile 5-4 majority. Columbia law professor Lev Menand and researcher Nathan Tankus argue that this "Hamilton exception" lacks a solid legal foundation, as Hamilton’s original vision for a national bank did not involve government regulatory bodies. The current legal landscape creates a precarious equilibrium where the Fed stands as a singular, vulnerable institution within an administrative state increasingly subject to presidential control. This shift threatens the broader rule of law, as the judiciary struggles to reconcile formalist separation-of-powers theories with the practical necessity of an independent monetary authority.