Executives from Wall Street are pressing White House officials, including Treasury Secretary Scott Bessent, to step in amid the escalating conflict between President Trump and Federal Reserve Chairman Jerome Powell, as reported by On the Money.
Powell, who was appointed by Trump during his initial term and has had his share of disagreements with the president regarding interest rates, stated on Wednesday that he intends to stay in his role at the Fed beyond his term’s expiration, as the Trump administration continues to investigate his costly renovation of the central bank.
He has made it clear in both public statements and private discussions that he can serve on the Fed’s influential policy-making board until 2028. “Regarding whether I will continue as governor after my term ends and the investigation wraps up, I haven’t decided yet. That decision will be based on what I believe is best for the Fed and those we serve,” he remarked during a recent press conference.
Trump, on the other hand, is urging him to resign immediately. There’s a growing concern on Wall Street that this ongoing dispute might prolong and further unsettle markets, which are already jittery due to global tensions. The nomination of Kevin Warsh to potentially take over for Powell has been stalled because of these issues, and Sen. Thom Tillis, a Republican from North Carolina who serves on the Senate Banking Committee, has stated he will not approve a new chair until the lawsuit against Powell is resolved.
“This is absurd and counterproductive,” commented one senior financial executive connected to the White House.
Another source in the executive circle shared with On the Money: “This really is a significant matter. If the investigation against Trump is lifted, Powell will most likely resign. If not, he’ll stay. Mr. Bessent is attempting to address the situation.”
On Thursday, Trump suggested that the inquiry should proceed and reiterated his criticism of Powell for not being more aggressive about lowering interest rates.
“The White House is dedicated to working alongside the Senate to ensure Kevin Warsh is swiftly confirmed as the new Chairman of the Federal Reserve Board,” White House Press Secretary Khush Desai stated.
Neither Bessent nor Powell’s spokesperson provided additional comments beyond previous statements made.
Typically, if civil servants lose confidence in their leadership, it is expected that they might leave their positions within government agencies. However, Powell argues that Trump’s and the Justice Department’s investigations aim to undermine the Fed’s esteemed role as an independent agency, especially concerning the White House’s fiscal ambitions.
Supporters of Powell on Wall Street, mainly high-ranking figures at leading banks and financial institutions, believe that the inquiry led by District of Columbia Attorney Jeanine Pirro is politically charged, intending to pressure Powell to step down before his term concludes in May, especially in light of interest rate cut demands despite rising inflation.
If Powell remains at the Fed, it could hinder Trump’s ability to exercise influence over the Fed’s policy-making committee once Warsh takes office.
At the core of this issue is Powell’s testimony to Congress regarding a $2.5 billion renovation of the Mariner S. Eccles building, often referred to as the “Taj Mahal of the National Mall.” Powell has insisted that he did nothing inappropriate, while supporters claim this isn’t the first instance of budget overruns on such projects in Washington. Critics contend that he minimized the lavishness of the renovation.
“Once Mr. Pirro publicly ends his investigation, yes, he will leave. Until then, no,” added a Wall Street executive.
