The president recently fired the two Democrats on the board of the National Credit Union Administration (NCUA), leaving only Kyle S. Hauptman–the lone Republican–on the board. In a press release, the NCUA stated that a single board member creates a quorum, and Mr. Hauptman will carry out the board’s duties alone.

The NCUA regulates American credit unions, the not-for-profit financial institutions that are owned by members, rather than shareholders. The firings, which appear to be along political lines, have led to concerns about the NCUA’s ability to remain a non-partisan, independent agency.

These firings also sparked fears that the Federal Reserve’s independence as a regulatory institution might be under threat.

President Trump repeatedly threatened to fire the head of the Federal Reserve, Jerome Powell, over several days, sending stock markets on another tumble.

This economic fallout seemed to be enough to reign in Trump—Powell is safe, for now.

Following the firings at the NCUA, there are no Democrats on the boards of the NCUA, FDIC, and FTC, according to Axios News. At the SEC, Caroline Crenshaw is the only remaining Democrat, and her term ends in December 2025. These regulatory bodies were created as bipartisan institutions, and the recent firings from the Trump Administration represent a departure from previous administrations’ commitment to have both Democrat and Republican leadership at the helm of these financial regulators.

“Trump is knocking down independent financial watchdogs like dominoes and the last one in the line is the Federal Reserve,” Emily Peterson-Cassin, corporate power director at Demand Progress Education Fund, a liberal group, told Axios News.

Is the Federal Reserve next? And what could a Fed with a political bent mean for the economy?

The Federal Reserve is the central bank of the United States. They’re responsible for setting monetary policy, regulating banks, and supporting stability across the financial sector. The dual goals of the Federal Reserve are to preserve price stability and ensure maximum employment.

The Federal Reserve’s main job is setting the federal funds rate. This rate sets a target for overnight lending and trickles down to other interest rates, generally affecting interest rates on bank loans for houses and cars.

Lower interest rates typically lead to greater economic activity. When it’s cheaper to borrow money, more people are likely to take a chance on buying a house or taking out a business loan. But lower rates can also lead to inflation—if economic activity becomes too high too quickly, demand can outpace supply, driving prices up.

The Fed is responsible for maintaining a balance; not letting rates get so high that they prohibitively limit economic growth, but also making sure they don’t get so low that inflation takes over.

The Federal Reserve has remained independent from political interference to prevent short-term economic manipulation for political gain. It’s easy to imagine a political actor wanting to lower interest rates to gain political support. However, while lower rates could lead to a short-term financial boon, without appropriate Fed action, inflation could quickly start rolling like a runaway train.

Because the Fed needs to make difficult, long-term decisions—essentially trying to find a “sweet spot” between inflation and recession—any political interference could damage their ability to do their job, and ultimately, do serious harm to the economy.

Alan Greenspan, 5-time Fed chair, once explained it like this: “It is generally recognized and appreciated that if the Federal Reserve’s monetary policy decisions were subject to congressional or presidential override, short-term political forces would soon dominate…the clear preference for lower interest rates would unleash inflationary forces, inflicting severe damage on our economy.”

Any indication that the Fed is no longer independent—that monetary policy decisions are being made by the White House—sends shock waves through the stock market. Financial experts, economists, and business leaders recognize that the only way to economic stability is through an independent Fed.

The Trump Administration’s removal of Democratic board members from key financial regulatory bodies like the NCUA signals a broader erosion of the bipartisan foundations that have historically protected the independence of institutions vital to economic stability. As markets react to even a hint of political influence over monetary policy, the connection between the economic and political becomes ever-more-tightly wound. The Federal Reserve will remain closely watched as the new, tariff-driven economic landscape unfolds.

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