Trump’s pointless Fed threats continue

ANOTHER VIEW

President Donald Trump’s campaign against the Federal Reserve resumed this week, as he threatened to fire Chair-man Jerome Powell and the Justice Department sent prosecutors to inspect construction at the central bank’s headquarters. It’s a pointless standoff that the president will lose. The question is how much he spooks markets and damages his own political standing before this is over.

Trump is frustrated with Powell for not cutting interest rates as fast as he would like. His Justice Department opened a criminal investigation of Powell, related to his testimony about the Fed’s renovations, and sent him subpoenas earlier this year. A federal judge threw them out last month. Their "dominant (if not sole) purpose is to harass and pressure Powell either to yield to the President or to resign and make way for a Fed Chair who will," wrote District Judge James E. Boasberg.

But it’s not just a Democratic- nominated judge who’s standing in the way of this lawfare strategy. It’s also the Republican-con-trolled Senate. Sen. Thom Tillis (R-North Carolina) has said that he "will oppose the confirmation of any nominee for the Fed — including the upcoming Fed Chair vacancy — until this legal matter is fully resolved."

Powell’s term as chair is up next month, and Trump nominated former Fed governor Kevin Warsh to replace him. Senate Banking Committee Chairman Tim Scott (R-South Carolina) has scheduled Warsh’s confirmation hearing for next Tuesday. But there is no sign of Tillis yielding, and on Tuesday he ridiculed the ongoing investigation into the Fed on social media.

Warsh can’t get through the Banking Committee without Tillis’s vote, and Senate Majority Leader John Thune (R-South Dakota) doesn’t sound inclined to overrule him. "At some point, they’re going to have to deal with the committee and they’re going to have to deal with Tillis," Thune said Wednesday. Tillis will leave the Senate at the end of this year, but he surely has GOP colleagues who privately agree with his stance (and are happy for him to take the political heat).

Fed chairs serve four-year terms, but they are also nominated to 14-year terms as members of the board of governors. Traditionally they leave the board after their term as chair has expired, but legally they can stay until their entire term is up. Powell, first nominated to the job by Trump in 2017, has said he has "no intention of leaving the board until the investigation is well and truly over with transparency and finality."

That means that, even if Tillis folds and Warsh gets confirmed, Powell could remain on the board, denying Trump another nominee, until 2028. When Fox Business host Maria Bartiromo seemed to raise that prospect with Trump in an interview that aired Wednesday, the president said he will fire Powell "if he’s not leaving on time."

But that’s another legal dead end for Trump because the law protects Fed board members from at-will presidential removal. The president tried to fire Fed Governor Lisa Cook last August, claiming irregularities on her mortgage applications, but the lower courts ruled against him and the Supreme Court let her stay as it weighed his appeal. January’s oral argument in the case went even worse for Trump than most observers expected, with a clear majority of justices sounding inclined to rule against him.

That ruling is expected by June, but the sooner Trump realizes the limits of his power over the Fed, the better. He’ll eventually need to allow his subordinates to drop the bogus Powell case if he wants to leave a lasting mark on the central bank.

— The Washington Post