- Key takeaway: President Donald Trump Wednesday afternoon said former Federal Reserve Chair Jerome Powell should be "forced to resign" from the bank's board in the wake of a report on renovation cost overruns at the Fed's headquarters.
- Expert quote: "The Building is over budget, at a Record Setting rate and, at a minimum, 'Too Late' Powell should be forced to resign from the Board." —President Donald Trump
- What's at stake: Powell said he would remain on the Fed board until the Justice Department's investigations into him were "well and truly over, with transparency and finality," and Trump's statement indicates that it is not.
President Donald Trump said on social media that former Federal Reserve Chair Jerome Powell must be "forced to resign" from the Board of Governors in light of an Office of the Inspector General report on ongoing renovations at the central bank headquarters.
The
Still, the president, in his post, directed Attorney General Todd Blanche to "study" the report and explore options. While he did not call for criminal charges explicitly, Trump said the U.S. government should sue Powell "at the highest level, by the United States government" for corruption or incompetence.
"The Building is over budget, at a Record Setting rate and, at a minimum, 'Too Late' Powell should be forced to resign from the Board. He can't manage a Building, and he certainly shouldn't be allowed to manage his High Interest Rate Policy (only on 'TRUMP!')," the post said. "This is Jerome Powell's fault, and he should be forced to resign, IMMEDIATELY! If he doesn't resign, he should be sued, at the highest level, by the United States Government, for either corruption or incompetence, both of which are completely unacceptable. … And no, I do not want this Building named after President Donald J. Trump, ME!"
The social media screed renews tension between Trump and the former Fed chair, who the president has
Powell, whom Trump first appointed to lead the Fed in 2017 — and who took over from former Fed Chair Janet Yellen in 2018 — took the unusual step of remaining on the Fed board after his term as chair expired in May. Powell was renominated by President Joe Biden in 2022. Fed chairs typically resign their board seats when their term as chair expires, but Powell said he would remain because of a Justice Department
Powell said that investigation was a pretext to removing him as chair, which he said in January was an affront to the independence of the institution. During his last press conference as chair in April, Powell said he would
"We believe the President's response to the Inspector General's report will convince Jerome Powell to keep his seat at the Federal Reserve at least through early January 2027," said Jaret Seiberg, managing director at the research group TD Cowen, in an analyst note Thursday morning. "Whether Powell stays until his term expires in January 2028 likely will depend upon whether the Justice Department acts on Trump's social media post or if this is just the final post in this extended saga over the renovation."
Trump, as both president and candidate, has frequently criticized Powell for the Fed's stance on interest rates, which he says are much higher than they should be. Trump said in another social media post on Sept. 16 — the day of the last Federal Open Market Committee meeting — that interest rates "should be 1%, or less," rather than the current rate of between 3.75% and 4%.
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The upcoming midterm elections in November could also shape Powell's thinking about when to depart the central bank, Seiberg said. A Democratic majority in the Senate could pave the way to an earlier exit because the chamber would be able to block Trump from appointing a replacement. Seiberg added that even a change in control of the House of Representatives could assuage some of the Fed governor's concerns.
"Even just the House going Democratic could convince Powell that he can depart without the risk of Trump ordering him prosecuted," he wrote. "This is because House Democrats would be able to investigate the prosecution and why the President is focused on him. Those could make for interesting hearings as Democrats will likely cite Trump construction projects like his ballroom that also exceeded the initial estimate."
Still, a successful effort to remove Powell from the board or prosecute him for the conduct of his job could have substantial repercussions for future Fed actions, both related to monetary policy and regulation.
Seiberg said whatever happens with Powell and other embattled Fed governors — namely Cook and former Vice Chair for Supervision Michael Barr — could set a precedent that could be built upon by whoever occupies the White House next.
"In other words, a Democratic president could replace all Republicans on the board," he wrote. "That could open the door to more radical policy changes, especially those involving capital and bank M&A."
