Does Trump Plan to Remove Powell Next Year?

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As a seasoned analyst with decades of observing political power plays and central bank dynamics, I find myself intrigued by the ongoing drama surrounding President Trump and the Federal Reserve. The prospect of a high-stakes chess match between Trump and Powell, two strong-willed figures, is reminiscent of a classic Washington standoff.

It’s not unexpected that President Donald Trump is considering methods to restructure the U.S. Federal Reserve by possibly purchasing Bitcoin using government money, aiming to make the United States a front-runner in the cryptocurrency sector. This topic was frequently discussed and emphasized during his election campaign.

During his initial presidency in February 2018, Donald Trump selected Jerome Powell as the Chair of the Federal Reserve’s Board of Governors. Throughout their tenure, they often found themselves at odds over matters concerning interest rates. However, in 2022, during his term, President Joe Biden chose to reappoint Powell for a second four-year term.

Powell stated that it’s prohibited for us to possess Bitcoins. However, whether or not this should be changed is something for Congress to decide, as we, ourselves, are not advocating for any alterations in the Federal Reserve’s laws.

Currently, discussions suggest that Trump could potentially dismiss Powell upon his return to office, but it’s important to note that Trump doesn’t have the authority to fire Powell directly. However, he might try to replace other members of the board instead.

In simpler terms, when it comes to decision-making at The Fed (Federal Reserve), there are seven key members who have been appointed by the President and approved by the Senate. Since some of these members are now Biden appointees, there’s speculation that if Trump is reelected, he might aim to replace or change the current team, essentially creating a new leadership lineup.

In simpler terms, it’s being reported that Michael Barr, who was appointed Vice Chair for Supervision under President Biden, could be Trump’s initial focus. The regulations Barr oversees concerning foreign banks, which isn’t directly linked to monetary policy, might provide Trump with grounds to contest Barr’s role.

According to reports, Barr’s tenure extends until 2026; however, Trump’s counselors are exploring options to potentially dismiss him. In light of this possibility, Barr has sought the expertise of Arnold & Porter, a highly regarded legal firm, for guidance on the matter.

Additionally, other potential appointees like Adriana Kugler, Philip Jefferson, and Lisa Cook are being considered for the role. It’s been whispered that Kugler, whose term concludes in January 2026, may have a damaged reputation, making her a more vulnerable choice.

Conversely, it is expected that Christopher Waller and Michelle Bowman, who were appointed by Trump, will retain their positions. Waller specializes in monetary policy, whereas Bowman concentrates on community banking matters.

To remove Federal Reserve governors, there must be substantial reason or cause, rather than simply differences in opinion on policy matters. Essentially, misbehavior or wrongdoing, not political disputes, are the grounds for their termination.

Alan Blinder, a former Federal Reserve Vice Chair, stated that Trump may attempt to do something, but he believes it’s likely that such an action would progress to the Supreme Court if challenged. However, Blinder anticipates that the Supreme Court will side with Powell.

As an analyst, I might express it this way: I believe Donald Trump may take alternative actions such as relegating Powell to a lesser role within the board. To my knowledge, this has not occurred previously, but some experts consider it a questionable legal ground. Additionally, he could potentially persuade a Republican-controlled Congress to revise the Federal Reserve Act, thereby reducing the institution’s independence.

Since the 1950s, the autonomy of the Federal Reserve has served as a key foundation for the United States’ economic strategy. Detractors argue that any attempt to undermine this independence might cause turbulence in the financial markets.

In a recent interview on NBC News’ “Meet the Press,” Trump addressed the question of my potential dismissal of Powell. When posed with the question, he stated, “No, I don’t think so.” While he suggested that Powell might comply if ordered, he expressed doubt about whether I would actually ask for his resignation. He added, however, that if I did give the order, Powell would indeed step down.

In a subsequent interview with Bloomberg in June, he indicated that he would allow the situation to unfold naturally, particularly if he believed the actions being taken were appropriate.

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2024-12-21 19:32