Maxine Waters pushes against Trump's Fed criticism to 'get rid of any uncertainties'
Top House Democrat Maxine Waters (D-Calif.) says Federal Reserve Chairman Jerome Powell reassured lawmakers on Wednesday that he will not be influenced by President Donald Trump’s criticism of the central bank.
In a closely-watched interaction at the top of Powell’s testimony to the House Financial Services Committee, Waters asked Powell a hypothetical question: “If you got a call from the president today or tomorrow and he said ‘I’m firing you, pack up, it’s time to go,’ what would you do?”
“Of course I would not do that,” Powell responded, adding later that “the law clearly gives me a four-year term and I fully intend to serve it.”
Waters told Yahoo Finance shortly after the hearing that she wanted to set the record straight on the Fed’s independence.
“One of the things I wanted to do was to get rid of any uncertainties in the markets and with Wall Street about what is going on,” Waters said. “I think that they have been very much pleased with Powell and the way that he's conducted himself, but I wanted him to reiterate here that he was not going to bow down to the president.”
Can a Fed chair be fired?
Powell has been a frequent target of criticism from President Trump, who was unhappy with the Fed’s decision to shrink its balance sheet and raise rates four times during 2018. Trump has called on the Fed to slash rates as much as 100 basis points and resume the crisis-era process of absorbing assets on its balance sheet.
As of late, Trump has also called on Trump to lower interest rates to take some steam out of a strengthening dollar.
Bloomberg reported in June that Trump boiled over to the point that he began exploring the legality of firing Powell. The Federal Reserve Act says that a Fed chair can only be removed “for cause,” but there is no precedent for what would qualify under those standards since no president has attempted a removal before.
For his part, Powell has insisted on multiple occasions that the Fed does not answer to the executive branch by statute, warning that it is dangerous to tinker with central bank independence.
“I think we have long experience that when you see central banks lacking those protections you see bad things happen,” Powell warned June 25, adding that his observation includes experiences in the United States.
Some lawmakers don’t see issue in Trump’s public criticism.
Rep. Andy Barr, a Kentucky Republican, said Wednesday that while he thinks Powell is doing an “outstanding job” as Fed chair, he finds Trump’s opinions healthy.
“My view is all of this feedback, from both the executive branch and the legislative branch, is a necessary and constructive part of oversight and is simply part of holding the Fed accountable and that it no way compromises Fed independence,” Barr said.
Powell said he agrees that Congress has oversight over the Fed, but did not speak to the pressures associated with commentary from the president.
Jessica Smith contributed to this article.
Brian Cheung is a reporter covering the banking industry and the intersection of finance and policy for Yahoo Finance. You can follow him on Twitter @bcheungz.
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