(Bloomberg) — Federal Reserve independence moved front and center in Congress Wednesday as Chairman Jerome Powell said he wouldn’t stand down from his job if President Donald Trump attempted to fire him.
House Financial Services Committee Chair Maxine Waters opened a semi-annual hearing on monetary policy by saying that central bank independence was the “elephant in the room’’ and added: “It is essential that the Federal Reserve maintains its independence from the executive branch.’’
Waters, a California Democrat, asked Powell directly: “If you got a call from the president today or tomorrow, and he said, ‘I am firing you, pack up, it’s time to go.’ What would you do?’’
“Of course, I would not do that,’’ Powell said in one of his strongest rebuffs before lawmakers of the notion.
“I can’t hear you,’’ Waters joked, causing laughter throughout the hearing room.
“My answer would be no,’’ Powell reiterated.
The exchange comes amid unprecedented attacks and attempted influence on monetary policy by Trump, who has criticized both Powell and the central bank’s policy decisions.
In his answer to lawmakers Wednesday, Powell strongly reasserted the Fed’s independence. That’s something the president has tried to call into question, even though Congress has authority for oversight of the central bank.
Trump discussed firing Powell in late 2018 and asked White House lawyers earlier this year to explore options for removing him as Fed chairman, Bloomberg has reported. Last month Trump denied in an interview that he’d threatened to demote Powell back to a board governor but said he’d “be able to do that if I wanted.”
The president has also tried to appoint several loyalists to the Board of Governors. Two past picks were panned by congressional members and failed to advance. Last week, Trump said he will appoint Judy Shelton to the Board of Governors. Shelton said after the announcement that “this president really gets it” and that she “will strive to support the U.S. pro-growth economic agenda with the appropriate monetary policy.”
Senator Sherrod Brown, the ranking Democrat from Ohio on the Senate Banking Committee, called Shelton “singularly unqualified” in comments to reporters Tuesday.
Trump also named St. Louis Fed research director Christopher Waller for one of the two open seats on the board. Waller works for St. Louis Fed President James Bullard, who dissented at the June meeting in favor of a quarter-point rate cut. Brown said he wants to meet with Waller, who “appears to be pretty good,” he said.
Waters’ comments were followed by Patrick McHenry, the ranking Republican on the committee from North Carolina, who asked Powell if policy was “impeded’’ by people saying positive or negative things about the central bank. Powell said it was not.
Lawmakers from both parties are becoming more vocal in their defense of Fed independence. And Powell embraced the central bank’s independence in his opening testimony, noting that it comes with a need for transparency and accountability.
Senator Patrick Toomey, a member of the Senate Banking Committee where Powell will testify Thursday, said any attempt by the president to fire Powell “would be a very, very bad idea.’’
“I don’t think the president actually does have the legal authority to do that,’’ Toomey, a Pennsylvania Republican, said in an interview with Bloomberg Television’s David Westin.