If you were to write a list of enthusiasts for Federal Reserve chairman Jerome Powell, Senator Elizabeth Warren’s name wouldn’t be at the top.
Yet that is precisely the cause of the volatility injected into markets this week—and not for the first time.
“I recognize that ultimately any of us can try to persuade the Fed chair about the best direction to go for the economy, but the Fed is independent and over time, over the long haul, our markets and our nation benefit from that independence.”
However, White House spokesman Kush Desai countered to Fortune: “President Trump can both call out the Fed for failing to do its job by its own stated objectives and ensure that taxpayer money is not wasted on things that do not benefit the American people.”
Previous administrations learned the hard way what it means to meddle in the Fed.
“Even the way that the board is structured and the way that the governor’s terms are out of sync with the political cycle and, the fact it still has a chair but a board where every vote counts.”
“Virtually every Trump appointee come[s] before Congress and pledged their loyalty to Donald Trump,” Sen. Warren, formerly the chair of the subcommittee on economic policy, added.
“While many people may roll their eyeballs at that, we also recognize that the president has the power to fire members of his cabinet.
“They serve at his pleasure and … it may not be the smartest way to build a cabinet, but it’s at least within the range of what is a president’s reasonable power—to pick the people generally that he wants to work with. The Fed chair is different, the whole point of the Fed is independence.”
This presents a delicate balancing act for the potential nominee: Maintaining Trump’s support throughout the process while convincing Congress and the markets that the Fed will truly act in the long term in the best interests of the economy.
“The … chair nominee is going to have a hard time threading the needle between obsequiousness to Donald Trump and convincing the markets that that nominee has the brains and the guts to stand up and do what the economy demands rather than what Donald Trump demands,” Sen. Warren added.
