Predictably, some of the first questions lobbed Jerome Powell’s way during his testimony before the House Financial Services committee on Wednesday related to Fed independence.
Although Larry Kudlow on Tuesday told CNBC that Powell’s job is safe “at the present time”, the very fact that Trump’s advisors are couching things in those terms, suggests the Fed chair is anything but secure in his current position.
After some quick remarks and pointed questions about Facebook’s profoundly silly (and probably dangerous) crypto foray, Maxine Waters got right down to business. “If you got a call from the president today or tomorrow and he said ‘I’m firing you, pack up, it’s time to go’, what would you do?”, she asked. Here is Powell’s response:
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“Well, of course I would not do that”, Powell said, meekly.
So half-hearted was Powell’s response that Waters half-jokingly said “I can’t hear you”, to laughs from the peanut gallery.
Once the laughter died down, Powell tried again. “My answer would be no”. Pressed one more time by Waters, he responded “No ma’am”.
One hopes Powell is ready to have his resolve tested, because in the event stocks sell off or the economy stumbles ahead of (or during) an election year, Trump will move to demote the Fed chair. As you’re probably aware, the White House legal team has already explored this possibility.
Ironically, Waters has probably raised the odds of that happening. After all, Trump isn’t a fan of Waters or Powell and he’s likely to see what happened on Capitol Hill this morning as a joke at his expense.