enhanced_deficit
Member
- Joined
- Mar 17, 2013
- Messages
- 28,575
Trump reportedly wants to fire the Fed chair, a move that could wreak havoc on the financial markets
John Melloy
Published 5 Hours Ago
President Donald Trump wants to fire Federal Reserve Chairman Jerome Powell for raising interest rates, according to a report, an unprecedented action by a president against the independent body, that could undermine confidence in the U.S. financial system already under the strain of a vicious equity sell-off.
Trump has discussed firing Powell privately because of his frustration with stock market losses in recent months, according to Bloomberg News, which cited four people familiar with the situation. The president's frustration intensified in recent days, with him discussing the firing "many times" during that time, according to the report.
The Dow Jones Industrial Average dropped 7 percent this week, its worst week in 10 years, on fears the Fed is unnecessarily slowing the economy as the central bank on Wednesday raised its benchmark interest rate for a fourth time this year. The Dow, which Trump cheered when it was at record highs earlier this year, is now down 9 percent in 2018.
The report said the Trump's advisers have warned him against such a move, which has never been done by a president and it's not even clear whether he has the legal authority to do so. White House and Fed spokespeople declined to comment to Bloomberg.
Can he fire him?
Powell became Fed chair in just February of this year after Trump nominated him to take over for Janet Yellen. He was easily confirmed in the Senate and has a four-year term.
While the president appoints the Fed's board of governors, including the chairman, the central bank "derives its authority from the Congress, which created the System in 1913 with the enactment of the Federal Reserve Act," according to the Fed's website.
"The Board reports to and is directly accountable to the Congress but, unlike many other public agencies, it is not funded by congressional appropriations," the site says
"The President can nominate a chair but once the chair is confirmed, the president is out of it and the only way you can remove a chair from office is literally if they broke the law. Congress will have to find a cause to remove them from office through a vote and a procedure," Ellen Zentner, Morgan Stanley's chief U.S. economist, told CNBC in October.
But Trump has already broken with precedent through his repeated criticism in the second half of this year of the Fed and the chairman to the press and via Twitter, including this week before the central bank hiked rates. Other presidents privately tried to influence the Fed, but none did so in such a public and forceful matter.
'Gone crazy'
"I think the Fed is making a mistake. They are so tight. I think the Fed has gone crazy," the president told reporters in October.
The independence of the Fed is one of the pillars of confidence global investors have in the U.S. financial system. Powell's removal would undermine that confidence because it would now seem the most important central bank was now under the control of a politician, who may not always have the best interests of the economy at heart. Sometimes it's necessary to raise interest rates to keep inflation in check. The Fed has a dual mandate: to maximize employment and stabilize inflation.
Related
[h=1]Trump: Federal Reserve is my biggest threat[/h]
John Melloy
Published 5 Hours Ago
President Donald Trump wants to fire Federal Reserve Chairman Jerome Powell for raising interest rates, according to a report, an unprecedented action by a president against the independent body, that could undermine confidence in the U.S. financial system already under the strain of a vicious equity sell-off.
Trump has discussed firing Powell privately because of his frustration with stock market losses in recent months, according to Bloomberg News, which cited four people familiar with the situation. The president's frustration intensified in recent days, with him discussing the firing "many times" during that time, according to the report.
The Dow Jones Industrial Average dropped 7 percent this week, its worst week in 10 years, on fears the Fed is unnecessarily slowing the economy as the central bank on Wednesday raised its benchmark interest rate for a fourth time this year. The Dow, which Trump cheered when it was at record highs earlier this year, is now down 9 percent in 2018.
The report said the Trump's advisers have warned him against such a move, which has never been done by a president and it's not even clear whether he has the legal authority to do so. White House and Fed spokespeople declined to comment to Bloomberg.
Can he fire him?
Powell became Fed chair in just February of this year after Trump nominated him to take over for Janet Yellen. He was easily confirmed in the Senate and has a four-year term.
While the president appoints the Fed's board of governors, including the chairman, the central bank "derives its authority from the Congress, which created the System in 1913 with the enactment of the Federal Reserve Act," according to the Fed's website.
"The Board reports to and is directly accountable to the Congress but, unlike many other public agencies, it is not funded by congressional appropriations," the site says
"The President can nominate a chair but once the chair is confirmed, the president is out of it and the only way you can remove a chair from office is literally if they broke the law. Congress will have to find a cause to remove them from office through a vote and a procedure," Ellen Zentner, Morgan Stanley's chief U.S. economist, told CNBC in October.
But Trump has already broken with precedent through his repeated criticism in the second half of this year of the Fed and the chairman to the press and via Twitter, including this week before the central bank hiked rates. Other presidents privately tried to influence the Fed, but none did so in such a public and forceful matter.
'Gone crazy'
"I think the Fed is making a mistake. They are so tight. I think the Fed has gone crazy," the president told reporters in October.
The independence of the Fed is one of the pillars of confidence global investors have in the U.S. financial system. Powell's removal would undermine that confidence because it would now seem the most important central bank was now under the control of a politician, who may not always have the best interests of the economy at heart. Sometimes it's necessary to raise interest rates to keep inflation in check. The Fed has a dual mandate: to maximize employment and stabilize inflation.
Related
[h=1]Trump: Federal Reserve is my biggest threat[/h]
Last edited:
