Trump Suggests Intervention in Federal Reserve Independence

(Reuters) – Republican presidential candidate Donald Trump on Thursday offered the most explicit indication yet of his interest in infringing on the Federal Reserve’s independence should he regain the White House.

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

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

Presidents criticizing the Fed, especially during times of interest rate hikes, is not new; however, such direct involvement in Fed affairs by Trump would mark a return to direct presidential influence in Fed policymaking since Richard Nixon in the early 1970s.

Trump’s views contrast with Vice President Kamala Harris’, who believes the Fed should operate independently of the president.

Presidential Appointment

The clearest path for exerting control is through the appointment process. The Fed chief is nominated by the president, subject to Senate confirmation, and Trump could try to install a Fed chief who prioritizes allegiance to him over the Fed’s independence.

Trump has a history of conflict with current Fed Chair Jerome Powell, whom he appointed in 2018. He revisited this relationship in his recent remarks, stating, “I fought him very hard.”

Powell has managed to maintain his position and build relationships with top Republicans and Democrats, bolstering his standing. His second term as chair, reappointed by President Joe Biden, does not expire until May 2026. Trump indicated this summer that he would not attempt to oust Powell before his term ends, allowing a little more than two years for Trump to influence a new Fed chief, assuming one could be confirmed.

The next president will also have the opportunity to select two Fed vice chairs: one for monetary policy and one for banking supervision.

The Fed System

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

The Fed board consists of seven members including the chair, two vice chairs, and four other governors, all presidential appointees subject to Senate confirmation.

Currently, two Trump appointees remain on the board, and while they maintain the tradition of Fed independence, three other candidates Trump had considered withdrew or were denied Senate confirmation.

Each regional Fed bank is led 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.

The Board Now

Fed governors serve 14-year terms, with term expirations staggered. The next expiration is due in 2026, held by Governor Adriana Kugler, a Biden appointee. Fed chairs and vice chairs serve four-year terms alongside their governorships.

• Adriana Kugler: Joined board 9/13/2023, term ends Jan 2026.
• Jerome Powell: Joined 5/25/2012, term ends Jan 2028.
• Christopher Waller: Joined 12/18/2020, term ends Jan 2030.
• Michael Barr (Vice Chair for supervision): Joined 7/19/2022, term ends Jan 2032.
• Michelle Bowman: Joined 11/26/2018, term ends Jan 2034.
• Philip Jefferson (Vice Chair): Joined 5/23/2022, term ends Jan 2036.
• Lisa Cook: Joined 5/23/2022, term ends Jan 2038.

The Bank Presidents Now

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

The current bank presidents’ terms all end in February 2026, when they will be re-evaluated for fresh five-year appointments. This re-upping process usually does not result in leadership changes.

• PHILADELPHIA: Patrick Harker – Expected end of term June 2025
• RICHMOND: Thomas Barkin – Expected end of term Jan 2028
• NEW YORK: John Williams – Expected end of term June 2028
• SAN FRANCISCO: Mary Daly – Expected end of term Oct 2028
• ATLANTA: Raphael Bostic – Expected end of term June 2031
• BOSTON: Susan Collins – Expected end of term July 2032
• KANSAS CITY: Jeffrey Schmid – Expected end of term August 2033
• ST LOUIS: Alberto Musalem – Expected end of term April 2034
• CHICAGO: Austan Goolsbee – Expected end of term August 2034
• MINNEAPOLIS: Neel Kashkari – Expected end of term July 2038
• DALLAS: Lorie Logan – Expected end of term February 2038
• CLEVELAND: Beth Hammack – Expected end of term January 2037

Due to take office Aug. 21