Wall Street executives are pleading with White House officials including Treasury Secretary Scott Bessent to intervene in the high-stakes drama between President Trump and Fed Chairman Jerome Powell, On The Money has learned.
Powell, who was named by Trump as Fed chair during his first term but has since been at odds with the president over interest rates, told reporters on Wednesday he will stay at the central bank even after his term ends amid the Trump administration plans not to drop a probe into his pricey renovations of the agency’s headquarters.
Powell has noted both publicly and in private conversations that he is entitled to hold a seat on the Fed’s all-important policy-making board of governors until 2028. “On the question of whether I will then continue to serve as a governor after my term ends, and after the investigation is over, I have not made that decision yet. And I will make that decision based on what I think is best for the institution and for the people we serve.,” he recently said at a press conference.
Trump, of course, wants him out immediately. Wall Street’s biggest concern is that the fight will drag on for months, creating instability in the markets which are already on edge over the Iran conflict. The nomination of Kevin Warsh to succeed Powell as chairman has been delayed over the controversy, with North Carolina GOP Sen. Thom Tillis, a member of the Senate Banking Committee, pledging not to vote on a new Fed chair unless the case against Powell is dropped.
“This is self destructive and dumb,” is how one top financial executive with ties to the White House put it.
Another C-suite source told On The Money: “This is a very, very big issue. He will leave if Trump’s investigations are removed. If not he will stay as a governor. Bessent is trying to resolve.”
On Thursday, Trump suggested the investigation should continue and chided Powell again for not being more aggressive in lowering rates.
White House Spokesman Kush Desai told On The Money: “The White House remains focused on working with the Senate to swiftly confirm Kevin Warsh as the next Chairman of the Federal Reserve. Warsh’s academic credentials, private sector success, and prior experience on the Fed Board of Governors make him eminently qualified to restore confidence and competence in Fed decision-making,”
A spokeswoman for Bessent had no comment. A spokesman for Powell referred to comments previously made by the Fed chair on the matter.
It is customary for public officials to leave government agencies entirely after losing confidence from the commander-in-chief. But Powell is insisting that Trump and his DOJ investigation is seeking to erode the Fed’s long-held position as an independent body from the White House fiscal policy goals.
Powell’s supporters on Wall Street — and that means the majority of top executives running banks and major financial institutions — believe the investigation led by Jeanine Pirro, the US Attorney for the District of Columbia, was politically motivated to force him out of office before his Fed chair term ends in May as well as pressure him to cut rates despite inflationary pressures.
By staying at the Fed as a governor after he steps down as chairman, Powell could thwart the president from asserting control over the policy making board once Warsh takes over.
At issue is Powell’s congressional testimony on the renovation of the Marriner S. Eccles building, billed the “Taj Mahal on the National Mall,” that is costing $2.5 billion. Powell has said he did nothing wrong, and his supporters point out that the project wouldn’t be the first to face cost overruns in Washington; his critics in Congress say he underplayed the extravagance of the project.
“Once Pirro publicly ends the investigation, yes he will leave. Until then, no,” one top Wall Street executive added.
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