Trump Threatens to Dismiss Fed Chair Powell Before Term Ends
Former President Donald Trump has reignited tensions with the Federal Reserve by threatening to remove Chair Jerome Powell if he does not resign when his term expires next month. In a recent interview with Fox Business, Trump stated, "I’ll have to fire him, OK?”
This renewed hostility from Trump arrives as his nomination for Powell’s replacement, Kevin Warsh, begins to progress. However, uncertainty hangs over whether Warsh can be confirmed before Powell’s term officially ends on May 15. Warsh is scheduled to testify before the Senate Banking Committee next Tuesday, which is a necessary step before his nomination is presented to the full Senate.
Republican Senator Thom Tillis, a committee member, has pledged to block Warsh’s confirmation unless an ongoing criminal investigation into Powell by the Justice Department is terminated. Tillis’s support is crucial for Warsh’s nomination to advance, posing potential roadblocks in the process.
In a recent press conference, Powell indicated that if his successor isn’t confirmed by the end of his term, he would continue serving as chair pro tempore until the position is filled, noting, “That is what the law calls for,” a practice he claims has been followed in previous situations.
Though Powell’s chair term ends in May, he remains a Federal Reserve governor until 2028. He has also stated his intention to remain on the board while an investigation into him is ongoing. Powell expressed a commitment to stay until the inquiry concludes “with transparency and finality.”
The criminal inquiry led by D.C. District Attorney Jeanine Pirro commenced in January and relates to allegations that Powell misled Congress regarding cost overruns at the Fed’s headquarters. Powell has publicly rebuffed these allegations, suggesting that the investigation is politically motivated due to the Trump administration’s dissatisfaction with the Fed’s monetary policy.
Last month, a federal judge dismissed two subpoenas issued by the Justice Department, effectively undermining the investigation. Pirro has indicated plans to appeal, and Trump has reiterated his desire for the probe to continue. He emphasized the importance of understanding the oversight of the renovations to the Fed’s building, suggesting a discrepancy in costs that needs clarification.
In a broader context, Trump has often critiqued Powell for not lowering interest rates adequately, leveraging the investigation as part of his justification for seeking Powell’s dismissal. Under Section 10 of the Federal Reserve Act, board members have a fixed term of 14 years, which can only be interrupted for cause as determined by the president—a term that lacks specific definitions but has been interpreted in legal contexts to encompass issues like neglect of duty or malfeasance.
As developments continue to unfold, the relationship between the White House and the Federal Reserve remains under significant scrutiny, particularly as implications for economic policy hang in the balance.
