Who will stick their neck out for the fed chair? So far, it’s slim pickings
It is no longer possible to be surprised by the Trump administration’s overreaching, including its pursuit of the president’s political enemies.
The latest is Federal Reserve chair Jerome Powell, the US equivalent of Federal Reserve chair Michele Bullock: under criminal investigation On evidence presented to Congress by Donald Trump’s Justice Department regarding a major renovation of the Fed’s office buildings.
Trump hates Powell for being “too slow” in lowering interest rates last year, even though he is a Republican and was actually appointed by Trump to chair the Fed during his first term.
In an extraordinary video message announcing that the Fed had been subpoenaed to testify before a grand jury, Powell emphasized: This was not about a building renovation. It was clearly political.
“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates [independently] “Instead of following the president’s preferences,” he said.
Trump going after his political enemies is nothing new. He has tried and so far failed to indict New York Attorney General Letitia James and former FBI director James Comey.
The fact that Powell is about to leave (his term ends in May) and has already cut interest rates in December makes the situation even more frustrating.
Powell had the courage to go public and announce the unprecedented attack on the Fed’s independence. But who else would stick out his neck for both himself and the principle? A poor choice so far.
Some business world and technology giants, who spent most of their days sharing their opinions on the internet, were in deep silence towards Powell.
Hedge fund manager Bill Ackman, Tesla and SpaceX boss Elon Musk, or entrepreneur and Trump advisor David Sacks had nothing to say. Silicon Valley types like Mark Zuckerberg and Tim Cook, or Wall Street bigwigs like Jamie Dimon, had not put their heads above the parapet to defend Powell at the time of this writing (Even though Dimon was before).
Justin Wolfers, an Australian professor of economics and public policy at the University of Michigan, said it was not surprising that people did not speak out when Trump showed a tendency to punish critics.
“You haven’t seen the business community react particularly strongly, but that’s exactly because of the president’s authoritarian instincts,” he said.
Likewise, there is little sign that Trump’s treasury secretary, Scott Bessent, or his commerce secretary, Howard Lutnick (both serious business figures in their own right), will side with Powell. Of course, we don’t know what they say behind the scenes.
Trump’s National Economic Council Director Kevin Hassett, who is a candidate to replace Powell as Fed chairman, was not happy with the development when he spoke to CNBC television.
“It’s part of the government to make sure people look at you and check that what you’re doing is totally fine,” Hassett said.
Asked if the renovations seemed like an excuse to go after Powell, he said: “We’ll find out when the time comes.”
The economic policy community has become much stronger. In a joint statement, 13 senior figures, including three living former Fed chairmen Alan Greenspan, Janet Yellen and Ben Bernanke, condemned the administration for using prosecutorial attacks to undermine the independence of the central bank and compared it to the behavior of developing countries.
“This is the way monetary policy is implemented in emerging markets with weak institutions, and this has extremely negative consequences for inflation and the functioning of economies more broadly,” he said.
“This has no place in the United States, whose greatest strength is the rule of law that underpins our economic success.”
Similarly, Harvard economics professor Jason Furman noted that other countries that have prosecuted or threatened to prosecute central bankers for political purposes include Venezuela, Russia, Turkey, Argentina and Zimbabwe.
“This is not a difficult or controversial issue. The attack on Powell is dangerous,” Furman said in a statement to X.
The most vocal resistance in Congress so far has come from Thom Tillis, a retired Republican senator from North Carolina, who said there was no longer any doubt that advisers in the Trump administration were actively pushing to end the Fed’s independence.
Trump has long argued that as president, he should contribute to the Fed’s interest rate decision. “I’ve done a great job. I’ve made a lot of money, I’m very successful… I think my voice should be heard,” he said last month.
Tillis, who sits on the Senate banking committee, said he would oppose the confirmation of any nominee for the Fed’s board of governors (including Powell’s recent vacancy) “until this legal matter is fully resolved.”
Wolfers said the pursuit of Powell was “senselessly disruptive” to the American people and did not benefit Trump’s own agenda because of the risk of interference from senators like Tillis.
“The president just had to wait until May,” Wolfers said. “He couldn’t wait four months so he went and blew up the credibility of the institution, or attempted to do so.”
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Michael Koziol is the North America correspondent for The Age and the Sydney Morning Herald. He is a former Sydney editor, Sun-Herald deputy editor and a federal political correspondent in Canberra.Connect with: excitement or email.
