President Donald Trump is threatening — again — to fire Federal Reserve Chair Jerome Powell, this time in the event that Powell doesn't step down from the Fed when his term as chair ends on May 15. Let’s play out how that might unfold. Imagine Trump did decide to fire Powell: The early phases might go the same way as Trump’s attempt to fire another Fed board member, Lisa Cook. In that case, the Supreme Court has allowed Cook to stay in her role while justices deliberate whether Trump has grounds to remove her “for cause.” The president claims that she committed mortgage fraud, but that underlying allegation has not been litigated. The ruling in that case could come any day now, but questions from the justices hinted that they would prioritize the Fed’s autonomy. Trump would need an advantageous ruling to make his Powell firing work. While the legal process unfolds, there are other players in this game of chicken, including Sen. Thom Tillis of North Carolina, who has vowed to block Trump’s Fed nominees as long as the Justice Department continues an investigation of the Fed that Tillis views as politicized. An attempt to fire Powell would almost certainly not change his mind. And a growing list of Republicans are also now calling on the DOJ to wrap up its probe. Then there’s Powell himself, who I understand has grown less and less likely to leave the Fed as Trump’s legal threats against him have intensified. Before the Justice Department went after the Fed, Powell probably would have departed when his chairmanship expired. Now, he is said to be far more open to staying on as a governor beyond that. His board term doesn’t end until 2028. So, does threatening to fire Powell — or actually following through with that threat — seem likely to get Trump what he wants? On the contrary, Trump seems to be trying to find a way to turn an easy win on the Fed into a long slog of a loss. His choice to replace Powell, Kevin Warsh, at this point enjoys broad support within the Senate GOP caucus, and he could be on track to be confirmed in time to take office when Powell’s term atop the central bank is over. Instead, Warsh’s nomination is in limbo because of the Justice Department investigation into the Fed’s headquarters renovations, where the government… [TheTopNews] Read More.
3 weeks ago
