Calls Mount in Congress for Fed Chairman’s Ouster

Plus, Ken Langone on why he’s bullish

Police patrol outside the Federal Reserve Bank of Boston. Photo: The Editors.

More voices in the Senate are calling for the resignation of the chairman of the Federal Reserve, Jerome Powell.

A Republican senator from Ohio, Bernie Moreno, said on July 13, “Jerome Powell is sabotaging working Americans and costing our country hundreds of billions of dollars with his political games. For the sake of the institution, resign.”

A Republican senator from Alabama, Tommy Tuberville, said on July 15, “Today’s a great day to fire Jerome Powell.”

A Republican senator from Wyoming, Cynthia Lummis, said on July 10, “I have several issues with Jay Powell but one of my biggest beefs is the $2.5B price tag on his new Palace of Versailles Fed HQ. He needs to go, and he needs to go now.” Today she reiterated the call, “I agree with @POTUS: Jay Powell must go.”

Also reiterating the call today for Powell’s exit was a Republican senator from Florida, Rick Scott: “Glad to see @POTUS exposing Jay Powell’s failed leadership and lack of accountability at the Federal Reserve. Powell has got to go!”

On July 14, a House member, Abraham Hamadeh of Arizona, also announced that he had written to Powell asking for Powell’s resignation, “In light of your gross mismanagement of the Federal Reserve’s headquarters resignation project, your apparent lack of candor, your failure to accurately assess the effects of tariffs, and your refusal to lower interest rates for the good of the nation in a timely manner.”

That’s four senators and one member of the House. Most of the press will ignore it and focus instead on JPMorgan Chase CEO Jamie Dimon—whose business is regulated by the Fed, a fact that the press coverage does not note—talking to handpicked reporters about how “the independence of the Fed is absolutely critical.”

People can debate whether President Trump has the power to fire Powell, but for sure a congressional majority has the power to restructure the Federal Reserve. The Constitution gives the monetary power to Congress, and Congress created the Fed. You could say it’s just four senators out of 100, but a few weeks ago it was just Lummis and a week or two ago it was just Lummis and Scott. We went from one, to two, to four. Maybe the senators are annoyed by the Fed regional bank president who, with “no irony,” recently called the Fed Open Market Committee the “World’s Greatest Deliberative Body.”

Trump has been very clear that what’s driving his concern is the effect of interest rates on the federal budget. “Every point costs us $360 billion,” Trump said. He is talking about the borrowing costs of the interest on the federal debt.

The professional economist class is all worked up about Trump’s tariffs, which are maybe a $300 billion a year tax increase, but if Trump is right, the Fed keeping interest rates at 4.33 percent instead of 3.33 percent is a $360 billion hit to the federal budget. I understand there are other effects of both the tariffs and the interest rates, and I am certainly not a big tariff fan, but just in terms of the economic scale and order of magnitude, the level of vilification for Trump and the tariffs versus Powell and the Fed are interesting to compare.

The other parallel is with the power of Congress enumerated in Article I. Congress has delegated its tariff or taxing power to Trump and its monetary policy power to the Fed. People are not big fans necessarily of Schumer and Pelosi or of Speakers Boehner, Hastert and Livingston or the other congressional leaders, but one reason Trump has been successful politically is that he is taking a maximalist view of his power rather than a minimalist view. Imagine if Congress took a similar approach, took its power back, and wielded it rather than letting others use it.

Home Depot cofounder and Invemed Chairman Ken Langone on why he is bullish: