Powell to Stay on Federal Reserve Board After Ending Chairman Role

Jerome Powell announced on Wednesday that he will remain on the Federal Reserve Board following his term as chairman, which concludes next month.

His choice to stay is influenced by worries regarding the Trump administration’s “legal attacks” on the Fed. Although Powell’s current term ends in January 2028, he mentioned that it hasn’t yet been decided how long he will serve on the board.

“The legal actions from this administration are unprecedented in our nation’s history,” Powell expressed during a press conference. “We’re concerned that these attacks might harm financial institutions and jeopardize the public’s ability to conduct monetary policy without political interference.”

Powell emphasized that the independence of the Fed is a crucial aspect of the U.S. economy’s success.

During Trump’s first term, he frequently criticized Powell and the Fed, claiming they were unnecessarily raising interest rates. Now, with Trump’s second term underway, the criticism has intensified. However, Powell asserted that this negativity did not affect his decision to remain.

“This isn’t about criticism from public officials. I’ve never claimed that such criticism is an issue,” he clarified.

Powell also denied that his staying put was in response to Trump’s ability to appoint a new governor. Currently, three board members were appointed by Trump. Powell, originally nominated by Obama in 2012, was later appointed as chairman by Trump in 2017 and reappointed by Biden.

Typically, the Fed chair retires entirely at the end of their term, with the last chairman being Marriner Eccles from the late 1940s to early 1950s.

Powell stated that he would adopt a “low profile” in his role to support Kevin Warsh’s leadership should he be confirmed as chairman. He indicated the Federal Open Market Committee would vote to confirm Warsh’s chairmanship.

The Fed chair is appointed by the President and approved by the Senate, while the FOMC chair is elected by the Board of Governors. There had been speculation that Powell might continue as FOMC chair longer, but his remarks clarified that he has no plans to do so. The board chair manages the Fed and oversees staffing, while the FOMC dictates monetary policy.

In an interesting twist, Powell found himself in a public dispute with the Justice Department after the agency subpoenaed the Fed for information regarding renovation cost overruns at the Fed’s headquarters. Earlier this year, Powell suggested that the subpoenas were aimed at swaying monetary policy without evidence, claiming the investigation was merely a pretext.

Jeanine Pirro, the U.S. Attorney for the D.C. District, refuted claims that her investigation was politically motivated. Trump maintained he was unaware of the investigation until Powell revealed it, despite having visited the construction site with Powell last summer.

Following Powell’s video statement, Senator Thom Tillis announced he wouldn’t support appointing Powell’s successor until the Justice Department halted its investigation. After Trump nominated Warsh, Tillis indicated his support while delaying the nomination process until the investigation concluded.

A federal judge later dismissed the subpoena, citing a lack of proper basis for the investigation, but Pirro’s office plans to appeal this ruling.

Last week, Pirro indicated he would close the investigation, although the Fed’s inspector general may keep examining the renovations, with a possibility of reopening the issue if new evidence arises. Tillis expressed satisfaction with the resolution over the weekend. On Wednesday, the Senate Banking Committee moved forward with Warsh’s nomination.

Tillis noted that he believes the investigation would only be reopened if a criminal referral were made to the Justice Department. He also mentioned being informed that the Justice Department wouldn’t use the ongoing appeal to revisit the investigation unless prompted by such a referral.

Powell congratulated Warsh on his departure from the Senate Banking Committee on Wednesday. He referenced Pirro’s statements about the potential for reopening the investigation as a reason for his decision to remain on as Fed director. Although Powell welcomed the assurance that the investigation would remain closed, he was not fully convinced it met his criteria for a definitive resolution.