Fed chief Powell confirms Trump is stuck with him until criminal probe is ‘well and truly’ over
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Mr Jerome Powell said he plans to remain at the helm of the Fed, even after his leadership term ends, until his nominated successor is confirmed by the Senate.
PHOTO: AFP
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WASHINGTON – Federal Reserve chairman Jerome Powell on March 18 pledged not to leave the US central bank until a criminal investigation of him by the Justice Department is resolved, a prospect likely to stymie President Donald Trump’s hopes of soon installing a central banker sympathetic to his demands for lower interest rates.
Mr Powell also said he plans to remain at the helm of the Fed, even after his leadership term ends, until his nominated successor – Mr Kevin Warsh – is confirmed by the Senate, a process already effectively placed in limbo by a top Republican senator’s vow to block the nomination as long as federal prosecutor Jeanine Pirro’s probe of Mr Powell continues.
The legal assault on the Fed is widely viewed as a stress on the central bank’s independence. Congress granted the Fed power to set interest rate policy independently. Fed officials, as well as a wide range of private-sector economists, believe that setting monetary policy free of political interference leads to better economic outcomes.
Central bankers who take orders directly from elected leaders tend to see worse outcomes on inflation, a point noted by New York Fed president John Williams in early January.
Mr Powell’s defiant stance could drive a wedge between Ms Pirro and Mr Trump.
Ms Pirro, a former Fox News host whom Mr Trump installed as the US attorney for the District of Columbia, has vowed to press on with the probe. The President, however, wants to bend the Fed to his will, but is encountering obstacles to doing so, not least of which is Ms Pirro’s investigation.
“I have no intention of leaving the board until the investigation is well and truly over with transparency and finality,” Mr Powell told reporters, referring to his seat on the Fed’s Board of Governors.
Moreover, he held out the possibility of remaining at the Fed even after the probe ends. “I have not made that decision yet. I will make that decision based on what I think is best for the institution and for the people we serve,” Mr Powell said.
While his term as chairman is set to expire in mid-May, his seat on the board does not expire until Jan 31, 2028, though Fed chairs rarely remain after completing their leadership stints. The last Fed chair who did so was Mr Marriner Eccles, at the request of then President Harry Truman in 1948.
The White House did not immediately respond to a request for comment on the matter.
Mr Powell said continuing as Fed chairman during any leadership vacuum caused by a delay in Mr Warsh’s confirmation is what “the law calls for”.
“If my successor is not confirmed by the end of my term as chair, I would serve as chair pro tem” until that is resolved, Mr Powell said in a press conference following the end of the Fed’s latest two-day policy meeting.
“That’s what we’ve done on several occasions, including involving me, and that’s what we’re going to do in this situation,” Mr Powell said, referring to the several months’ delay in the Senate confirming his reappointment as Fed chair in 2022.
Senator Thom Tillis, a Republican member of the Senate Banking Committee, has said he will not allow Mr Warsh’s confirmation to proceed until the probe is over. A US judge last week quashed subpoenas Ms Pirro had served on Mr Powell and the Fed, which might have opened a path for the nomination to proceed. But Ms Pirro said she would appeal against the ruling, likely delaying it.
Feud with Trump
Mr Powell’s comments come amid a combative relationship between Mr Trump and the Fed. Since returning to office just over a year ago, the President has repeatedly attacked the Fed over not cutting interest rates as aggressively as he would like, and has threatened on a number of occasions to fire Mr Powell.
Mr Trump has also attempted to fire Fed governor Lisa Cook, in a development that has made its way to the Supreme Court.
Mr Powell pushed back forcefully against the legal investigation targeting him over issues of cost overruns linked to renovation of the Fed’s Washington headquarters, saying the investigation was effectively punishing the Fed for not following Mr Trump’s monetary policy demands.
A judge agreed. “The government has offered no evidence whatsoever that Powell committed any crime other than displeasing the President,” Chief US District Judge James Boasberg wrote. “The government might as well investigate him for mail fraud because someone once saw him send a letter.” REUTERS
