How Trump could influence the Fed

Aug 9 - Republican presidential candidate Donald Trump on Thursday offered the most explicit indication so far 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 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 that would attempt to erode the Fed's independence if he wins. While the Trump campaign distanced itself from the Wall Street Journal report at the time, his remarks on Thursday indicate he is squarely aligned with one of the proposals' main thrusts: If he becomes president, Trump should be consulted on interest rate decisions, and Fed banking regulation proposals should be subject to White House review. Presidents grousing about the Fed - especially at times when it is raising interest rates - is hardly a new phenomenon, but such a direct involvement in Fed affairs by Trump should he win would make him the first president since Richard Nixon in the early 1970s to dabble directly in Fed policymaking. Trump's view contrasts with that of Vice President Kamala Harris, his rival for president. CNBC, citing an aide to Harris, on Friday reported that the Democratic candidate believes the Fed should make decisions independent of the president. PRESIDENTIAL POINTMENT 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 attempt to install a Fed chief willing to elevate allegiance to him over the Fed's long-standing independence. Trump has a long history of knocking heads with current Fed Chair Jerome Powell, whom he installed as central bank chief in 2018. It was a relationship Trump revisited in his remarks on Thursday, saying "I fought him very hard." Powell managed to weather Trump's verbal assaults and has spent considerable time as chair building relationships with top Republicans and Democrats in Congress that have fortified his standing. His second term as chair - Powell was reappointed by President Joe Biden - doesn't expire until May 2026, and Trump told Bloomberg this summer that he would not try to oust Powell before his term ends - something Trump talked repeatedly about doing during his time in the White House. That would leave a window of a bit more than two years for Trump to exert sway over a new Fed chief of his choosing, assuming such a compliant choice wins Senate confirmation. The next president will also have a chance to choose the 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, comprises the Washington-based Federal Reserve Board; 12 regional Federal Reserve banks dotted across the country; and the interest-rate-setting Federal Open Market Committee. The Fed board's seven members include the chair, two vice chairs 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 hewn to the tradition of Fed independence. Three others Trump had eyed for a board seat 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 run by a president appointed by a subcommittee of each bank's board of directors. The FOMC comprises 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 or the unexpired remainder of a previous incumbent's term. Term expirations are staggered at two-year intervals, with the next one due in 2026, a seat held by Governor Adriana Kugler, a Biden appointee. Fed chairs and vice chairs serve four-year terms running concurrently with their governorships. Powell's position as chair expires in May 2026, but his board seat continues until 2028. While historically former Fed chiefs have not stayed on as governor if not re-appointed as Fed leader, there is no requirement that they leave. If Powell were to opt to stay on, it would limit Trump's options for installing more board members compliant with his wishes. The following is a list of current governors, in order of their term expirations with the nearest listed first. Board Member Joined board, Board term Became chair /vice Chair/ vice term extended ends chair, reappointed chair term ends Adriana Kugler 9/13/2023 Jan 2026 Jerome Powell, 5/25/2012, Jan 2028 2/5/2018, May 2026 chair 6/16/2014 5/23/2022 Christopher Waller 12/18/2020 Jan 2030 Michael Barr, vice 7/19/2022 Jan 2032 7/19/2022 July 2026 chair for supervision Michelle Bowman 11/26/2018, Jan 2034 1/23/2020 Philip Jefferson, 5/23/2022 Jan 2036 9/13/2023 Sept 2027 vice chair Lisa Cook 5/23/2022, Jan 2038 9/8/2023 THE BANK PRESIDENTS NOW Fed bank presidents are picked by the six non-banker members of their boards of directors, and must be approved by the Fed Board. They can serve until the mandatory retirement age of 65 or, if appointed after the age of 55, for 10 years or until they reach age 75. The terms of all current bank presidents end in February 2026, when they will be considered for a fresh five-year appointment by the Board of Governors. This reupping process historically has not resulted in any change in leadership, but this is custom not law. The following is a list of term limit dates for the Fed regional bank presidents. Bank President Expected end of term PHILADELPHIA Patrick Harker June 2025 RICHMOND Thomas Barkin Jan 2028 NEW YORK John Williams June 2028 SAN FRANCISCO Mary Daly Oct 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 MINNEOLIS Neel Kashkari July 2038 DALLAS Lorie Logan February 2038 CLEVELAND Beth Hammack* January 2037 *is due to take office Aug. 21

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