President Donald Trump is trying to oust FederalReserve Chairman Jerome Powell, but neither side will back down. (REUTERS Carlos Barria)
What will happen when Federal Reserve Chairman Jerome Powell’s term expires in May is devolving into a game of chicken, Axios contends.
Powell’s term ends in less than two months. Yet who will take over — "at a time of elevated inflation, stalled job creation and a war overseas driving energy prices higher — is looking surprisingly uncertain,” the Axios article states.
The drama surrounding Powell escalated last week when a federal judge quashed Justice Department subpoenas of the Fed. The subpoenas concerned the Fed’s building renovation and Powell's testimony about them. Judge James Boasberg termed the subpoenas “blatantly pretextural.”
Trump was outraged by Boasberg citing the President’s social media posts and comments about the Powell situation. The court "is left with no credible reason to think that the Government is investigating suspicious facts as opposed to targeting a disfavored official," Boasberg wrote. He added that all were designed to pressure Powell to “knuckle under.”
The Boasberg ruling further clouds the nomination of Kevin Warsh, the president's pick to succeed Powell at the Federal Reserve on May 15. A favorable decision for the administration would have allowed the OoJ inquiry to wind down. Then it was anticipated Republican Sen. Thom Tillis, who refused to move along on Warsh’s confirmation with the Senate Banking Committee, would relent.
What happens next depends on a few things:
- Maybe the administration’s appeals on Boaberg moves quickly and the judge is overturned;
- Maybe the DOJ quietly drops the Fed case, the Senate confirms Warsh, and he takes office in May.
- Maybe Tillis backs down and the nomination proceeds
- Or perhaps the Senate confirms Warsh without moving the nomination through the Banking Committee.
But there are also “weirder possibilities,” Axios notes, if Warsh is not confirmed by May 15.
Powell could remain in place after his term lapses. It has happened twice before, but only when Powell (2022) and Alan Greenspan (1996) were getting second terms. It’s also possible the Federal Reserve Board of Governors could select a "chairman pro tempore,” turning to vice chair Philip Jefferson.
But as Axios concluded, “None of this is normal. And the clock is ticking for the key parties to resolve it.”
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