In his first appearance since stepping down as Federal Reserve chair, Fed governor Jerome Powell used his remarks at the John F. Kennedy Profile in Courage award ceremony on Sunday to oppose President Donald Trump's attempts to take control of the central bank.
"Like many other institutions, the Fed has been undergoing a stress test, " Powell said. During Trump's second term in office, the administration has launched a criminal investigation into Powell's handling of the renovation of the Fed's historic headquarters building in Washington, D.C. Trump has also attempted to fire Fed governor Lisa Cook over allegations she mishandled mortgage applications prior to her time at the central bank.
Powell said political interference could damage the Fed's standing and erode the public's trust and jeopardize the central bank's mission to ensure price stability and maximum employment.
"If any administration finds a way to remove Fed officials over policy differences, then future administrations will do so as well. The public would lose faith that the central bank will make decisions based only on what's best for all Americans," Powell said.
He further noted that both Fed officials and the public have a duty to "safeguard" the central bank's credibility, which has taken decades to build and sustain.
"Partisan political differences are normal -- indeed essential -- in a thriving democracy. But we ought to be united in our commitment to the higher principles that define our nation. Chief among them is respect for the rule of law," Powell said.
Powell did not leave the Fed as many of his predecessors chose to do after the expiration of their terms as chairs. Sunday's speech signals that Powell will use the governor position to defend the instution against political interference and oppose any actions by the administration that would reduce the Fed's credibility. Powell said at his final press conference as chair that he would remain on the board as a governor "for a period of time to be determined." His term as governor does not expire until January 2028.
The Trump administration has attempted -- with little success -- to exert more control over the Fed, repeatedly urging the central bank to cut interest rates. Trump has been able to appoint one Fed governor, Stephen Miran, to fill the remainder of Gov. Adriana Kugler's term that expired at the end of January. Trump then nominated now-chairman Kevin Warsh to fill that position.
Sen. Thom Tillis (R., N.C.) vowed to block any Fed chair nominee until the Justice Department investigation into Powell ended. That prompted the department to announce in April that it was closing its probe to pave the way for the Senate to approve Warsh's confirmation. However, U.S. attorney Jeanine Pirro noted she would restart a criminal investigation should the facts warrant the action. In the interim, the Fed's inspector general is conducting an investigation into the cost overruns of the remodel project.
Cook has remained at the Fed after suing to block Trump's termination. Both a federal judge and the D.C. Circuit Court of Appeals ruled in Cook's favor and granted a stay while the lawsuit continues in court. The administration has appealed the decisions to the Supreme Court, which heard oral arguments in January. The justices appeared skeptical of the administration's standing to remove Cook; a decision is expected before the court breaks for its summer recess.
Powell said Sunday that while the Fed may make mistakes -- policymakers are only human -- it is essential that the U.S. preserve the good in public institutions like the Fed even as we try to also improve them.
"What the public has every right to expect is that we will make our decisions based only on our best economic analysis of what would most benefit the people we serve. We do not take into account the fortunes of any political party or politician in making those decisions," Powell said.
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