The White House earlier this year explored a legal way to demote Federal Reserve Board Chair Jerome H. (“Jay”) Powell, as President Donald Trump ramped up his criticism of the central bank leader, it was reported Tuesday.
The Federal Reserve, in an email, responded that “under the law, a Federal Reserve Board chair can only be removed for cause,” according toBloomberg News, which first reported the White House action.
According to Bloomberg, the White House counsel’s office in February looked into the legal actions necessary to remove Powell as chairman of the Fed board, but leave him on the board overall – thus giving Trump the opportunity to name a new chairman. The counsel’s office apparently reached a conclusion about Powell’s removal as chairman – but that result has been closely held by the White House, Bloombergreported.
Trump has been highly critical of the Fed’s actions under Powell’s leadership to raise or not cut interest rates; The president has repeatedly urged the central bank to change course, particularly when the central bank’s rate-setting committee was raising rates. (The Federal Open Market Committee (FOMC) meets Tuesday through Wednesday morning; Powell is scheduled to hold a press conference Wednesday at 2:30 p.m. EDT.)
But Powell has been resolute in his position. During an interview televised in March for the CBS program 60 Minutes, he said that “the law is clear that I have a four-year term. And I fully intend to serve it.”
The Fed chairman has also repeatedly invoked the independence of the agency, including in February. During a Feb. 7town hall with teachers (that was video-streamed nationwide), in a nearly five-minute response to the first teacher question posed to him – asking “what is it that you do at the Fed?” – Powell said at least five times that the Fed acts in a “non-political” way (or a variation of that phrase) in carrying out its actions to achieve its dual mandate of price stability and full employment.
In asserting that the Fed works in a “non-political” way, Powell noted the central bank has “precious independence from political concerns” and that it does things “on a non-political basis.” He also pointed out that the board’s governors are “directed to carry out our work in a non-political way.”
He also said that the Fed has accountability to the public, as the other side of its role in being non-political. “Our accountability runs through Congress,” Powell said, noting that he has frequent meetings with lawmakers.
Bloomberg, in its report, noted that since 1977 the Senate has been required to confirm chair and vice chair nominees for four-year terms separately from the confirmation of their governorships, which run up to 14 years.
The news service quoted former Federal Reserve General Counsel Scott Alvarez as saying courts would likely interpret the 1977 change as removing not only the president’s unilateral authority to name the chair, but also the ability to dismiss him or her without cause.
Trump nominated Powell (already a Fed board member) as chairman in November 2017; he was confirmed by the Senate in January. There are two seats open on the Fed board now; Trump has nominated, or considered naming, at least four people for those seats – none were ultimately acted on by the full Senate.