With the independence and credibility of the U.S. Federal Reserve Board already under fire from U.S. President Donald Trump, the regional Fed banks could be politicized too, Scotiabank Economics warns.
Trump has repeatedly mused about firing Fed chair Jerome Powell and has purported to sack Fed governor Lisa Cook, which would allow for a majority of Trump appointees on the Fed board.
In a research note, Derek Holt, vice-president and head of capital markets economics at Scotia, raised the spectre of the “Magafication” of the various regional Feds — a possibility that, he suggested, risks undermining confidence in U.S. markets.
According to the note, the terms of the presidents of all 12 regional Fed banks are up for renewal in February 2026.
“Normally it’s largely a rubber stamp affair that doesn’t get much notice. This time could be different given the MAGA politics,” it said.
For instance, it suggested that politicizing the regional Fed banks could follow efforts to remake the Fed’s board of governors — which appoints a third of the board for each regional bank, with the chair of each board picked from these members.
The note laid out a possible scenario that could play out.
“First stack the [Fed board] with Trump’s chosen ones, then perhaps reshape the district boards with new appointments while perhaps applying pressure on the member banks that sit on the boards of the Fed’s district banks. Then presto, pick new presidents or apply pressure on existing ones to comply with Trump’s wishes,” it suggested.
There’s no precedent for this sort of action, and the legality of it is unclear, it said — but the current U.S. administration has repeatedly ignored historical norms.
“Obviously all of this isn’t a base case at this point. Then again, none of this was,” the research note said.
“It’s prudent to be mindful toward next steps over coming weeks and months,” it warned. “Such a scenario — stacking the board and regional presidents — [in my opinion] risks a severe blow to confidence in U.S. markets.”