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

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

by Bloomberg

1h 5m•July 17, 2026
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Overview of Lev Menand and Nathan Tankus on Why Fed Independence Is Now Hanging by a Thread

This episode of Odd Lots examines the Supreme Court’s recent removal-power rulings and what they mean for the Federal Reserve’s independence. Hosts Tracy Alloway and Joe Weisenthal speak with Columbia law professor Lev Menand and researcher Nathan Tankus about how the Court has weakened protections for independent agencies, why the Fed got a narrow carve-out, and why that carve-out may not be stable for long.

Main Takeaways

  • The Supreme Court has dramatically expanded presidential power to fire agency heads, with the Fed being treated as a special exception.
  • That Fed exception is legally shaky and, according to the guests, hangs on a thin and unstable rationale.
  • The Court’s reasoning relies on “history and tradition,” borrowing a framework from Second Amendment jurisprudence.
  • Lev Menand and Nathan Tankus argue the Fed is being misunderstood: the legal basis for its independence is not the same as the historical story the Court is telling.
  • The broader trend is a weakening of the administrative state and a growing push toward executive-branch maximalism.

Background: The Key Legal Cases

Humphrey’s Executor vs. Myers

  • Myers (1926): The Court took a broad view of presidential removal power.
  • Humphrey’s Executor (1935): The Court limited that power, allowing Congress to restrict removal of members of certain independent agencies, especially those with quasi-legislative or quasi-judicial functions.
  • The episode frames current doctrine as a long-running battle between these two visions of executive power.

The Recent Fed Exception

  • In recent cases, the Court broadly allowed presidents to fire agency officials but signaled that the Fed was different.
  • That carve-out is tied to the idea that the Fed has a special historical pedigree going back to Alexander Hamilton and early U.S. banking institutions.
  • The guests emphasize that this reasoning is fragile and may be vulnerable to future challenges.

Why the Fed Is a Special Case

The Court’s Logic

  • The Court appears to be saying the Fed is protected because it has a unique historical tradition of independence.
  • To justify that exception, the Court uses a “history and tradition” test similar to the one used in Second Amendment cases.

The Guests’ Critique

  • Menand argues the Court is misreading Hamilton:
    • Hamilton advocated for a private, investor-owned national bank, not a modern government regulator.
    • The First Bank of the United States was not a federal agency in the modern sense.
  • Tankus adds that the modern Fed is not just about monetary policy:
    • It is also a regulator.
    • Its operations blur the line between monetary and fiscal policy.
  • Their point: the Court’s historical analogy is sloppy and potentially misleading.

The Deeper Constitutional Issue

Executive Power vs. Congressional Power

  • The discussion repeatedly returns to the Constitution’s separation of powers:
    • The president executes the law.
    • Congress controls the purse.
    • The courts enforce legal limits.
  • Menand argues that allowing the president too much control over the Fed threatens Congress’s power of the purse, especially because the Fed can effectively create money and extend credit.

Why That Matters

  • If the president could directly control the Fed, monetary tools could potentially be used in ways that have major fiscal consequences.
  • Tankus highlights that the Fed’s internal financing structure gives it unusual autonomy from the normal appropriations process.
  • That autonomy is part of why the Fed is constitutionally sensitive.

Broader Implications for the Administrative State

  • The episode argues that the Court’s decisions are part of a larger attack on the New Deal-era administrative state.
  • Independent agencies like the FTC, FCC, SEC, and others are being reclassified as more directly subject to presidential control.
  • The Fed stands out as the one major exception, making it increasingly isolated and exposed.

Why the Fed’s Position Is Unstable

  • The carve-out for the Fed appears to be supported by only a small number of justices in a durable way.
  • The guests stress that:
    • The current arrangement is not secure.
    • The Court has already undermined the logic that supports agency independence generally.
    • Future cases could easily revisit and narrow the Fed’s protection.

Notable Insights

  • On Hamilton: The Court’s reliance on Hamilton is, in the guests’ view, historically mistaken.
  • On history and tradition: A doctrine developed for gun rights is now shaping the structure of the federal bureaucracy.
  • On legitimacy: The Court may be choosing an awkward legal rationale because the alternative could trigger financial instability or a broader constitutional crisis.
  • On the long term: The Fed may be the last major independent agency standing, but even that status looks precarious.

Bottom Line

The episode argues that the Fed’s independence is no longer a settled constitutional fact. Instead, it is a narrow and fragile exception carved out of a broader judicial campaign against independent agencies. The Court’s reasoning depends on questionable historical analogies, and the guests believe the Fed’s long-term legal security is in real doubt.