Fed independence matters. Donald Trump does not have the legal authority to fire Chairman Powell.

Fed independence matters. Donald Trump does not have the legal authority to fire Chairman Powell.

One major question tonight that is still unclear is whether or not the president is preparing to fire or at least attempt to fire the chairman of the Federal Reserve. It’s clear the president has wanted Jerome Powell out and has repeatedly called on him to quit his job. But then SN confirmed last night that the president gestured to a letter during a meeting that he had with House Republicans at the White House that was a draft of Powell’s termination notice should the president choose to use it.

Are you completely ruling out the idea of firing Jerome Powell. I I don’t rule out anything, but I think it’s highly unlikely unless he has to leave for fraud. I mean, it’s possible there’s fraud involved with the 2.5 2.7 billion renovation. Have you drafted a letter? I haven’t drafted a letter. So, you didn’t show a letter to Republican lawmakers last night? No.

I talked about the concept of firearm. I said, “What do you think?” Almost every one of them said I should, but uh I’m more conservative than they are. Trump said he is unlikely to fire him after suggesting that he might. And that fraud caveat that you heard there, it’s part of this new campaign we’re seeing from the White House against Powell being waged by Trump officials, accusing him of potentially lying to Congress during his testimony regarding the building renovations over at the Fed.

Or Powell denied the extravagant ch changes that they accused him of. My source tonight has a lot of thoughts about that, I’m sure. Democratic Senator Elizabeth Warren of Massachusetts is here with me, and it’s great to have you, Senator. when you hear uh and see what the White House is doing, do you believe that he is creating a pretext to to fire Jay Powell or at least try to? Look, Donald Trump has been trying to figure out how to fire Jay Powell for months now and he hasn’t been subtle about it. In fact, he has said he was

going to do it back in March and then when it tanked the markets, he suddenly reeled that back in. he doesn’t have legal authority to do it. But more importantly, the markets know that the Fed is supposed to be independent and want to leave it that way. So, I think what’s going on here is is there an end run? And look, I want oversight.

I believe in oversight. I believe in transparency. I think it’s perfectly reasonable to take a look at the expenses when the Fed has renovated this 90year-old building. All of that is really important, but give me a break. All of us know what a pretext looks like, and this certainly quacks like a pretext. So, you’re saying this this notion because they’ve been renovating that building since 2021. It’s over budget.

I mean, you’re saying there’s legitimate concerns about that, but not enough to to warrant the firing of the Fed chair. Look, let’s take a look. Obviously, you always want to look at the information. I push for full transparency, but Donald Trump can’t say over and over and over and over, I want to fire him.

I want to fire him. I want to fire him. Can’t somebody figure out how to fire him? And then suddenly say, I’m really interested in seeing the receipts for painting and plumbing in the repairs of a 90-year-old building. Um, he’s looking, it would appear that he is looking for a pretext to get rid of Jerome Pal.

And and I just want to remind you here why this matters. The president has the capacity to fire everybody in his cabinet. That’s the setup. But he does not have the legal authority to fire the chairman of the Fed. The Fed is supposed to be independent. The terms run for five years. They don’t run concurrency with uh concurrent with presidential terms.

And the idea is that the Fed will be an economist, a banker, somebody who will look at the hard data and try to make the best decisions that he or she possibly can about monetary policy and about regulatory oversight. There is insulation for a reason. And ultimately around the world, people depend on the independence of the Fed.

And you know how I know that? Because the last time that Donald Trump flirted very aggressively with firing Jerome Powell, the bond market tanked. And the reason for that is because that was all the people what the bond market is really about is people around the world saying if things get really scary, do we go to the United States as a place to protect our money? And what what investors were saying is not the United States because Donald Trump wants control of the Fed.

So this isn’t about whether interest rates should go up or should go down. This isn’t about whether there should be more regulation or less regulation of the bank. This is about whether or not Donald Trump gets to control the Fed the same way he controls every other part of government. And the answer here is no.

He does not. And if he tries, he will bring down the US financial markets. You think it’ll bring down the US financial markets if he if he ousts J. Powell? Yep. I do. I do because he will then be saying that decisions about interest rates in the United States will not be based on the economics.

They’ll be based on politics. He will be saying that whatever is happening on the regulatory front which banks get investigated will not be done on the economics on the financials. It will be done on politics. And that means we will lose one more piece of the financial structure that makes the United States economy the envy of the world.

And Donald Trump is just hacking away at that. And and what you have to remember here is why he’s hacking away. He’s hacking away at it. Because he wants Jerome Pel to lower those interest rates for political reasons. Donald Trump is creating a lot of trouble in this economy. The tariff chaos is starting to drive prices up and it’s causing businesses not to invest.

Donald Trump and the Republicans just passed a bill that is going to blow a $4 trillion addition to the federal debt. And they’re trying to deregulate right and left. Shut down the Consumer Financial Protection Bureau, ease back on the two big to fail banks. Each one of those things puts more risk into the economy, the three of them together. Multiply those risks.

Donald Trump is trying to juice the economy by getting interest rates down. He doesn’t get to control the Fed. That and that is not going to help us long term with the economy. Yeah. And of course they’re arguing the inflation numbers are proof that that come out that they should be lowering rates.

But can I just ask on you mentioned the term of the Fed chair and obviously uh this is Jay Powell’s second term. Trump today expressed surprise about him being appointed to this job even though it was Trump who appointed him. I just want people to listen uh to what the president said today but then what also he said in 2017 when he had handpicked Powell Powell to take this job.

He’s a terrible he’s a terrible Fed chief. I was surprised he was appointed. I was surprised frankly that uh Biden put him in and extended him but uh they did. Accordingly, it is my pleasure and my honor to announce my nomination of Jerome Powell to be the next chairman of the Federal Reserve.

I am confident that with Jay as a wise steward of the Federal Reserve, it will have the leadership it needs in the years to come. What’s it like for you to hear that now? You know, I just I just want to point out I voted against Jerome Pal to be Fed chair. I think I was the only person on the banking committee to vote against him when Donald Trump nominated him.
(08:24) I argued against President Biden renominating him for a second term. And yet, I’m here today to say that Fed independence matters. The fact that Donald Trump can’t even remember that he’s the one who picked him to begin with and talked about his qualifications and how good he would be in this job is just one more reminder that we know what’s going on with these nominees.

Every one of them gets picked just for loyalty to Donald Trump. I’ve watched one after another come through the United States Senate for confirmation and the only question is are you loyal to Donald Trump? And they say yes they are. What will you do? I will do whatever Donald Trump wants me to do. Okay, if you’re Secretary of Education, I may not like it, but at least that’s the deal.

Okay, if you’re Secretary of Defense, but not for the Fed chairman. The Fed chairman is supposed to be independent and that helps strengthen our financial system. But for Donald Trump, anyone who doesn’t bend the knee to Donald Trump is effectively a threat, an enemy, and somebody he wants to get rid of.

And that’s what’s going on right now. And Donald Trump knows there would be real risk to actually firing him. So he’s trying to find ways around that. And so far he hasn’t. But but make no mistake, Caitlyn, there is a cost to what Donald Trump is doing because he creates more chaos. He creates more uncertainty in the financial system.

And just like he does with the tariffs, that chaos, that uncertainty, it scares off investors. It depresses making the real investments going forward in this economy that we need to make.