Instant Reaction: Trump Reportedly Considers Firing Fed Chair Powell

President Donald Trump is likely to fire Federal Reserve Chair Jerome Powell soon, a White House official said, and discussed the possible move in a meeting with congressional Republicans on Tuesday night.   

While the lawmakers voiced support for the move, which would likely roil financial markets and lead to a consequential legal showdown, Trump has not made a final decision and could change his mind, according to the official who requested anonymity to discuss a private conversation.   

In response to multiple similar reports, President Trump says his administration is “very concerned”, but “not planning on doing anything” about Fed Chair Jerome Powell.   

Paul Sweeney and Lisa Mateo speak with Bloomberg's Chris Condon about the potential fallout.

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Episode Transcript

Speaker 1 (00:01):
This is a breaking news update from Bloomberg instant reaction
and analysis from our three thousand journalists and analysts around
the world.

Speaker 2 (00:11):
President Donald Trump is likely to fire Federal Reserve Chair
Dromepouse soon. A White House official set and discussed the
possibility in a meeting with Congressional Republicans on Tuesday night.
While the lawmakers voice support for the move, which for
likely royal financial markets that lead to a consequential legal showdown,
Trump has not made a final decision and could change

(00:32):
his mind, according to if He'shery, who requested anonymity to
discuss a private conversation. To get more on this, we
go to Chris Condon, Bloomberg Federal Reserve Team leader. Chris,
has this happened before? Has a president ever removed a
FED chief?

Speaker 3 (00:47):
No?

Speaker 1 (00:47):
Absolutely, not. Closest thing to this was in the nineteen
seventies Jimmy Carter didn't like his FED chief, and so
he gave him the job as Treasury Secretary, which is
not exactly firing somebody. So no, we have not come
anywhere really close to anything like this.

Speaker 3 (01:03):
And Chris, now, this was announcering a meeting with Congressional
Republicans and the lawmakers actually voice support for this move.
Did that surprise you at all?

Speaker 1 (01:11):
Well, it depends, you know, which Republicans are we talking about.
If you have a small group of Republicans, you could
probably find a small group of Republicans that would be
adamantly opposed to this. You could also easily find a
small group of Republicans that are gung ho for this.
So it depends on who these folks are exactly. But
you know, it is still meaningful that you had some

(01:35):
gathering of GOP lawmakers and there wasn't anybody pushing back
at least that we know of, So yeah, they could.
It is quite meaningful.

Speaker 2 (01:45):
Hey, Christian, I think you know one of the this
isn't easy to do. That's maybe one of the reasons
why it's never been done before. Talking about this is
not an easy thing to do, as Section ten of
the Federal Reserve Act requires quote cause for removal. Tell
us about Section ten and how that can be used, right.

Speaker 1 (02:02):
Okay, So importantly, this language has been tested in the
courts for decades and decades, going back to the nineteen thirties, really,
and the courts have examined what lawmakers meant by these words,
when they put it in the Federal Reserve Act and
in other laws establishing other federal agencies. It's a pretty

(02:26):
high hurdle. Now, it should be said that hurdle is
potentially going to be lowered by the Supreme Court for
other federal agencies. Trump has moved to fire some FCC commissioners,
and the Supreme Court is hearing that case, and there's
a lot of speculation that they will allow Trump to
do that. But the Court very importantly has already been

(02:48):
in the preliminary ruling signaled that they are likely to
treat the FED differently, saying it has unique historical qualities
as a public private institution. Legal scholars have interpreted that
as a sign that the Supreme Court will protect and
keep this four cause hurdle in place for FED governors.

(03:11):
So if Trump wants to remove Howell from the FED
all together, he will have to show cause. Now, historically
that's meant inefficiency, neglective duty, or malfeasans according to the
legal experts. And that's not just you know, missing a

(03:33):
few dollars here and there. This is real neglective duty,
real incompetence fraud. It's considered a high legal hurdle, So
he would still have quite a fight in front of
him if he wants to remove Powell from the FED.

Speaker 3 (03:49):
Yeah, so that's the least of my question. Is this
more about interest rates or is this more you know,
President Trump also talked about renovations over at the Central Banks.
I mean, what's the leading factor behind this decision?

Speaker 1 (04:01):
Right? Okay? So interestingly, I'd point out a couple of
things here. Powell's term as chair ends in May of
twenty twenty six, and he has in some recent he's
been questioned will he leave as most chairs do because
he doesn't have to leave, he can stay on as

(04:22):
a governor, and he has declined to answer that question.
It is since he's done that that administration officials have
begun to apparently look for other reasons that could satisfy
this for cause hurdle, And they brought up this the
rehabilitation of two big buildings at the FED controls its

(04:44):
headquarters in downtown Washington, which are undergoing a very expensive renovation,
and they're trying to grab onto this as a cause. Now,
many people have viewed this as trying to find find
some excuse to fire Powell, when in fact, the real

(05:06):
beef they have is interest rates. That's what Trump has
focused on constantly since being re elected. You hear him
almost every day asking for the FED or demanding the
FED lower rates. So yeah, a lot of people are
saying that's really the center of the conflict, and he's
using this other issue as the stick to beat the power.

Speaker 2 (05:31):
Over Chris Timing, this is all new to everyone. If
President Trump were to remove FED chair, pal would mister
palell then I guess Sue is a private citizen or
how who would file suit against it?

Speaker 1 (05:45):
He would? He would as the party that is harmed.
He would have to sue personally. It would be a
big deal. It would be expensive. Although he's a fairly
wealthy fellow, and he has given indication that he that
he would fight. I think we can expect that. One
other thing to note. I think that's very important to
add though, Even if Powell were successfully removed, the Federal

(06:09):
Open Market Committee sets interest rates, not the chair, so
it would not mean that a new person in charge
would suddenly be able to change the direction of interestory
policy at the FED.

Speaker 3 (06:22):
There were a couple names tossed around you, Kevin Hasid,
Kevin Walsh, Christopher Waller. How would you describe the difference
between them.

Speaker 1 (06:29):
The big difference is between all of the other candidates
and Christopher Waller. Waller is a sitting Fed governor. He
is a Trump appointee, but he's pretty widely viewed as
somebody who will follow his instincts as a very experienced economist.
He is at the dubbish end of the spectrum at

(06:52):
the moment. On the FOMC, he has suggested that he'd
be ready to cut possibly this month. There's some speculation
of to what extent he's, you know, auditioning for the job.
The others, though, are much more clearly considered loyalists to Trump,
especially Kevin Hassett. Kevin wartsh perhaps less so, but he's

(07:12):
been pursuing that job for a very long time, and
while historically a Hawk, he has been talking very dubbishly,
lovely