Explanatory-How Trump Could Influence Fed By Reuters

(Reuters) – Republican presidential nominee Donald Trump on Thursday gave the clearest indication yet of his interest in undermining the independence of the Federal Reserve if he regains the White House.

“I think the president should at least have (a) say there” in Fed decisions, the former president told reporters at his Mar-a-Lago residence in Florida.

His comment follows a report this spring that Trump’s allies have drawn up proposals that would seek to erode the Fed’s independence if he wins. While Trump’s campaign distanced itself from the Wall Street Journal report at the time, his remarks on Thursday indicate that it is perfectly aligned with one of the main thrusts of the proposals: If he becomes president, Trump should be consulted on rate decisions interest, and the Fed. Banking regulation proposals should be subject to White House review.

Presidents poking fun at the Fed — especially at times when interest rates are rising — is hardly a new phenomenon, but such direct involvement in the Fed’s affairs by Trump, should he win, would make him the first president from Richard Nixon in the early 1970s, who will have fun. directly into Fed policymaking.

Trump’s vision contrasts with that of Vice President Kamala Harris, his rival for president. CNBC, citing a Harris aide, reported Friday that the Democratic nominee believes the Fed should make decisions independently of the president.

PRESIDENTIAL APPOINTMENT

The clearest way to exercise control is through the appointment process. The Fed chief is nominated by the president, subject to Senate confirmation, and Trump could seek to install a Fed chief willing to raise his loyalty to the Fed’s longstanding independence.

Trump has a long history of butting heads with current Fed Chairman Jerome Powell, whom he installed as central bank chief in 2018. It was a relationship Trump revisited in his remarks on Thursday, saying “M – I fought him very hard”.

Powell has been able to weather Trump’s verbal attacks and has spent considerable time as president building relationships with key Republicans and Democrats in Congress that have strengthened his position.

The president’s second term — Powell was reappointed by President Joe Biden — does not expire until May 2026, and Trump told Bloomberg this summer that he would not try to oust Powell before his term ends — something that Trump has repeatedly talked about doing it during his time. at the White House. That would leave a window of just over two years for Trump to exert influence over the new Fed chief he picks, assuming such a compliant pick wins Senate confirmation.

The next president will also have the chance to choose the Fed’s two vice chairmen — one for monetary policy and one for banking supervision.

THE FED SYSTEM

The Federal Reserve System, created by Congress in 1913, includes the Federal Reserve Board in Washington; 12 regional Federal Reserve banks spread across the country; and the Federal Open Market Committee for interest rate setting.

The seven members of the Fed’s board of directors include the chairman, two vice-chairmen and four other governors. All are presidential appointees subject to Senate confirmation.

Beyond Powell, two Trump appointees remain on the board, and governors Michelle Bowman and Christopher Waller have lived up to the Fed’s tradition of independence. Three others Trump sought for a seat on the council who were seen by many as pushing that envelope — Stephen Moore, Judith Shelton and Herman Cain — withdrew or failed to win Senate confirmation.

Each regional Fed bank is headed by a president appointed by a subcommittee of each bank’s board of directors.

The FOMC includes all seven board members, the president of the Federal Reserve Bank of New York, and four other regional bank presidents on a rotating basis.

COUNCIL NOW

Fed governors serve 14-year terms or the unexpired remainder of a previous incumbent’s term. Term expirations are staggered at two-year intervals, with the next due in 2026, a seat held by Gov. Adriana Kugler, a Biden appointee.

Fed presidents and vice presidents serve four-year terms, running concurrently with their terms as governors. Powell’s position as chairman expires in May 2026, but his seat on the board continues until 2028. Although historically, former Fed chiefs have not stayed on as governor unless they have been reappointed as Fed leader, there is no requirement for them to leave. If Powell chose to stay, it would limit Trump’s options to install more board members according to his wishes.

The following is a list of current governors, in order of term expiration, with the closest listed first.

Board member Joined the board, board mandate Became president/vice president/vice

term extended chair, term again term

it ends

Adriana Kugler 13.09.2023 Jan 2026

Jerome Powell, 5/25/2012, Jan. 2028 2.5.2018, May 2026

chair 06/16/2014 05/23/2022

Christopher Waller 12/18/2020 January 2030

Michael Barr, vice 19.07.2022 Jan. 2032 19.7.2022 July 2026

chair for

SURVEILLANCE

Michelle Bowman 11/26/2018 January 2034

23.01.2020

Philip Jefferson, 23.05.2022 Jan. 2036 13.09.2023 Sept. 2027

vice-president

Lisa Cook 5/23/2022 January 2038

09/08/2023

BANK PRESIDENTS NOW

Fed bank presidents are elected by the six non-bank members of their boards of directors and must be approved by the Fed Board. They can serve up to the mandatory retirement age of 65 or, if appointed after the age of 55, for 10 years or until they reach the age of 75.

The terms of all current bank presidents expire in February 2026, when they will be considered for a new five-year appointment by the Board of Governors. Historically, this rebuilding process has not resulted in any leadership changes, but that is the custom, not the law.

The following is a list of deadlines for regional Fed bank presidents.

Bank President Expected end of term

PHILADELPHIA Patrick Harker June 2025

RICHMOND Thomas Barkin January 2028

NEW YORK John Williams June 2028

SAN FRANCISCO Mary Daly October 2028

ATLANTA Raphael Bostic June 2031

BOSTON Susan Collins July 2032

KANSAS CITY Jeffrey Schmid August 2033

ST LOUIS Alberto Musalem April 2034

CHICAGO Austan Goolsbee August 2034

MINNEAPOLIS Neel Kashkari July 2038

DALLAS Lorie Logan February 2038

CLEVELAND Beth Hammack* January 2037

*is

thanks to

office Aug 21