1 00:00:02,480 --> 00:00:09,920 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. I'm Stephen Carol and 2 00:00:10,080 --> 00:00:12,560 Speaker 1: this is Here's Why, where we take one news story 3 00:00:12,640 --> 00:00:14,800 Speaker 1: and explain it in just a few minutes with our 4 00:00:14,840 --> 00:00:20,960 Speaker 1: experts here at Bloomberg. You should resign immediately. We should 5 00:00:20,960 --> 00:00:23,160 Speaker 1: get somebody in there that's going to lower interest rate. 6 00:00:23,200 --> 00:00:26,680 Speaker 1: It's always too late, a little slow, and I'm not 7 00:00:26,760 --> 00:00:28,920 Speaker 1: happy with him. Too late. I him too late Powell, 8 00:00:28,920 --> 00:00:30,120 Speaker 1: because he's always too late. 9 00:00:29,960 --> 00:00:32,520 Speaker 2: Too late Powell, that's his nickname, and it's a shame. 10 00:00:32,600 --> 00:00:35,279 Speaker 1: It's ridiculous. I mean, he goes out pretty so unfortunately, 11 00:00:35,320 --> 00:00:36,479 Speaker 1: because I think he's terrible. 12 00:00:36,520 --> 00:00:37,839 Speaker 2: Do you ever have a guy that's. 13 00:00:37,720 --> 00:00:39,760 Speaker 1: Not a smart person and you're dealing with him and you. 14 00:00:39,720 --> 00:00:41,080 Speaker 2: Have to deal he's not a smart guy. 15 00:00:41,400 --> 00:00:43,320 Speaker 1: I'd love him to resign if you want to taste 16 00:00:43,320 --> 00:00:44,879 Speaker 1: it done, lousy. 17 00:00:44,560 --> 00:00:46,800 Speaker 2: Jump and the fake news is saying, oh, if you 18 00:00:46,920 --> 00:00:50,240 Speaker 2: fired him, it would be so bad. It would be 19 00:00:50,360 --> 00:00:52,320 Speaker 2: so bad. I don't know why it would be so bad. 20 00:00:53,080 --> 00:00:56,480 Speaker 1: It's become one of the US President's most common complaints. 21 00:00:56,680 --> 00:00:59,880 Speaker 1: Donald Trump wants lower interest rates and he thinks Federals 22 00:01:00,000 --> 00:01:04,040 Speaker 1: serve Chair Jerome Powell isn't doing it fast. Enough. Powell's 23 00:01:04,120 --> 00:01:06,960 Speaker 1: term heading up the US Central Bank runs until May 24 00:01:07,000 --> 00:01:09,600 Speaker 1: of next year, but the President and his allies are 25 00:01:09,600 --> 00:01:13,759 Speaker 1: taking every opportunity to criticize him. A recent controversy over 26 00:01:13,800 --> 00:01:17,000 Speaker 1: the renovation of a Federal Reserve building has again raised 27 00:01:17,040 --> 00:01:19,880 Speaker 1: the question of whether Trump could remove the FED chair 28 00:01:20,120 --> 00:01:23,840 Speaker 1: before his term is up. But here's why it's not 29 00:01:24,000 --> 00:01:29,679 Speaker 1: easy to fire Jerome Powell. Our Federal Reserve reporter Amara 30 00:01:29,760 --> 00:01:32,640 Speaker 1: Mackway joins me now for more. Amara, great to talk 31 00:01:32,680 --> 00:01:36,880 Speaker 1: to you. We've spoken before about Donald Trump criticizing Jerome Powell. 32 00:01:37,280 --> 00:01:40,320 Speaker 1: Have those complaints changed since he returned to the White House? 33 00:01:41,200 --> 00:01:44,560 Speaker 2: So, essentially, no, they haven't. President Donald Trump, since he 34 00:01:44,640 --> 00:01:48,120 Speaker 2: returned to office in January, has essentially been upset with 35 00:01:48,160 --> 00:01:50,840 Speaker 2: the Federal Reserve because they have not lowered interest rates 36 00:01:50,920 --> 00:01:53,960 Speaker 2: so far this year, and so his criticisms of Chair 37 00:01:54,000 --> 00:01:57,840 Speaker 2: Powell and the FED largely center around this idea that 38 00:01:57,880 --> 00:02:00,400 Speaker 2: he wants lower rates and the FED has not provided 39 00:02:00,480 --> 00:02:02,920 Speaker 2: that for him this year. Those really mirror some of 40 00:02:02,960 --> 00:02:04,880 Speaker 2: the same complaints that he had about Powell and the 41 00:02:04,920 --> 00:02:07,520 Speaker 2: FED during his first term. He often called for lower 42 00:02:07,600 --> 00:02:11,280 Speaker 2: rates during his first term, but this time the complaints 43 00:02:11,320 --> 00:02:14,280 Speaker 2: have been really really relentless, and they've also taken on 44 00:02:14,320 --> 00:02:18,960 Speaker 2: sort of this personal nature where President Trump has basically 45 00:02:19,120 --> 00:02:23,200 Speaker 2: started calling Jerome Powell various names. He's given him the 46 00:02:23,280 --> 00:02:26,880 Speaker 2: nickname too Late to basically suggest that Chair Pal is 47 00:02:26,880 --> 00:02:31,080 Speaker 2: often too late to make policy adjustments, and various other names. 48 00:02:31,120 --> 00:02:34,160 Speaker 2: So the attacks have gone beyond sort of Chair Powell's 49 00:02:34,160 --> 00:02:36,959 Speaker 2: stance on interest rates to kind of the more personal nature. 50 00:02:37,280 --> 00:02:38,919 Speaker 2: And then, as you were talking about in the intro, 51 00:02:39,400 --> 00:02:41,320 Speaker 2: this new line of attack is about this two and 52 00:02:41,360 --> 00:02:44,000 Speaker 2: a half billion dollar renovation project that the FED is 53 00:02:44,080 --> 00:02:47,040 Speaker 2: undergoing now at its headquarters in Washington, d C. And 54 00:02:47,120 --> 00:02:49,720 Speaker 2: that has opened up a new line of criticism from 55 00:02:49,800 --> 00:02:51,480 Speaker 2: President Trump and some of his allies. 56 00:02:52,040 --> 00:02:54,520 Speaker 1: So how far has the President gone and saying that 57 00:02:54,560 --> 00:02:57,359 Speaker 1: he wants to remove Jerome Powell from his job. 58 00:02:57,800 --> 00:03:01,000 Speaker 2: So most recently the President had has kind of said 59 00:03:01,000 --> 00:03:02,840 Speaker 2: again that he does not plan to remove chair Pal 60 00:03:03,040 --> 00:03:05,680 Speaker 2: from his job. Earlier in the year, he had posted 61 00:03:05,720 --> 00:03:09,680 Speaker 2: on social media that Chair Power's termination cannot come fast enough, 62 00:03:10,080 --> 00:03:12,399 Speaker 2: and that had sort of made people speculate about whether 63 00:03:12,440 --> 00:03:15,840 Speaker 2: he would try to remove him. But then the market's 64 00:03:15,840 --> 00:03:17,320 Speaker 2: freaked out a little bit, and so he kind of 65 00:03:17,360 --> 00:03:19,600 Speaker 2: backed off of that and has continued to say that 66 00:03:19,639 --> 00:03:23,519 Speaker 2: he's going to allow Chair Power to continue to serve 67 00:03:23,880 --> 00:03:27,480 Speaker 2: in his role. But what's interesting about this renovation project 68 00:03:27,600 --> 00:03:30,640 Speaker 2: is that some of the people in Trump's orbit have 69 00:03:31,160 --> 00:03:35,880 Speaker 2: started to suggest that the issue could amount to cause 70 00:03:36,120 --> 00:03:39,160 Speaker 2: to fire Jerome Powell, which is a legal term around 71 00:03:39,160 --> 00:03:41,760 Speaker 2: the FED. There is this very high legal standard in 72 00:03:41,840 --> 00:03:44,280 Speaker 2: order to be able to remove someone from the Federal 73 00:03:44,320 --> 00:03:47,120 Speaker 2: Reserves Board of Governor, you need to have what's called cause, 74 00:03:47,560 --> 00:03:49,880 Speaker 2: and the courts have generally taken that to mean like 75 00:03:49,960 --> 00:03:53,760 Speaker 2: malfeasance or neglect of duty. So the fact that someone 76 00:03:53,800 --> 00:03:57,600 Speaker 2: in the Trump administration is saying that this issue could 77 00:03:57,680 --> 00:04:02,000 Speaker 2: amount to cause has cause people to start to wonder, Okay, 78 00:04:02,200 --> 00:04:04,760 Speaker 2: are people in Trump's world trying to kind of lay 79 00:04:04,800 --> 00:04:07,640 Speaker 2: the groundwork to say, you know, President Trump, if you 80 00:04:07,680 --> 00:04:11,000 Speaker 2: wanted to remove him, you could you could have had 81 00:04:11,040 --> 00:04:13,760 Speaker 2: the ability to do that because this issue has given 82 00:04:13,800 --> 00:04:16,160 Speaker 2: you the cause. So there's been some speculation about that, 83 00:04:16,600 --> 00:04:19,040 Speaker 2: despite the fact that publicly President Trump has continued to 84 00:04:19,080 --> 00:04:21,599 Speaker 2: say he does not plan to remove Chair Pal. 85 00:04:22,000 --> 00:04:24,839 Speaker 1: So let's talk about this renovation issue. Then, what do 86 00:04:24,920 --> 00:04:27,400 Speaker 1: we know about what's happened and whether or not it 87 00:04:27,440 --> 00:04:29,240 Speaker 1: could meet that legal definition. 88 00:04:30,160 --> 00:04:32,280 Speaker 2: So I will say the legal experts that I've talked 89 00:04:32,320 --> 00:04:34,560 Speaker 2: to about this issue say that they do not think 90 00:04:34,600 --> 00:04:38,520 Speaker 2: that it rises to the level of cause. But essentially 91 00:04:38,560 --> 00:04:42,680 Speaker 2: what has happened is that in recent weeks, this renovation 92 00:04:42,760 --> 00:04:44,839 Speaker 2: project that the feed has been doing really for several 93 00:04:44,960 --> 00:04:47,920 Speaker 2: years has come to the forefront again. So there was 94 00:04:47,960 --> 00:04:52,400 Speaker 2: a media report that characterized this renovation as very extravagant. 95 00:04:52,480 --> 00:04:56,160 Speaker 2: They called it essentially the Palace of Versailles, which, if 96 00:04:56,160 --> 00:04:58,240 Speaker 2: you know, the Palace of Versailles, very ornate, huge, right 97 00:04:58,279 --> 00:05:01,159 Speaker 2: Louis the fourteenth and so so that kind of brought 98 00:05:01,160 --> 00:05:03,919 Speaker 2: this issue to the forefront. So when Chair Pale was 99 00:05:04,000 --> 00:05:08,400 Speaker 2: on the hill last month testifying before senators, he was 100 00:05:08,480 --> 00:05:11,800 Speaker 2: asked about this and he kind of disputed some of 101 00:05:11,839 --> 00:05:14,919 Speaker 2: what that media report was talking about. He talked about, 102 00:05:14,960 --> 00:05:17,080 Speaker 2: you know, we don't have these ornate features, we don't 103 00:05:17,120 --> 00:05:19,840 Speaker 2: have a bunch of new marble, we don't have, you know, 104 00:05:20,240 --> 00:05:22,760 Speaker 2: elevators going up to private dining rooms, really kind of 105 00:05:22,800 --> 00:05:27,279 Speaker 2: pushing back on this idea that the project is overly ornate. 106 00:05:27,720 --> 00:05:30,640 Speaker 2: And so what we then saw after the hearing was 107 00:05:31,000 --> 00:05:33,520 Speaker 2: one of the Trump administration officials. Bill Pulte, who's the 108 00:05:33,560 --> 00:05:35,920 Speaker 2: head of one of the federal housing agencies, come out 109 00:05:35,960 --> 00:05:38,480 Speaker 2: and say that he felt that Chairpal had not been 110 00:05:38,560 --> 00:05:42,720 Speaker 2: honest during that testimony about some of these features, and 111 00:05:42,760 --> 00:05:45,280 Speaker 2: that's what he's saying rises to the level of cause. 112 00:05:45,560 --> 00:05:47,960 Speaker 2: And then he had Russ Vote of the Office of 113 00:05:48,120 --> 00:05:50,800 Speaker 2: Management and Budget at the White House last week come 114 00:05:50,839 --> 00:05:53,640 Speaker 2: out and send a letter to Chair Pale again saying 115 00:05:53,720 --> 00:05:56,520 Speaker 2: like this doesn't add up, like we're very concerned about this, 116 00:05:56,960 --> 00:05:59,560 Speaker 2: I want you to answer several questions about this project. 117 00:05:59,800 --> 00:06:02,520 Speaker 2: And then Vote said that that Pal had also grossly 118 00:06:02,600 --> 00:06:05,920 Speaker 2: mismanaged the FED, so again kind of strong language, kind 119 00:06:05,960 --> 00:06:08,680 Speaker 2: of suggesting that Pal had done something wrong. And that's 120 00:06:08,800 --> 00:06:11,520 Speaker 2: again what's kind of driving this speculation that maybe they're 121 00:06:11,560 --> 00:06:14,000 Speaker 2: trying to set up this cause to remove him. But 122 00:06:14,440 --> 00:06:17,000 Speaker 2: what the FED says is that this again, this renovation 123 00:06:17,080 --> 00:06:19,800 Speaker 2: has been going on for several years. It involves two 124 00:06:19,960 --> 00:06:23,400 Speaker 2: historic buildings, and so that requires like a lot of 125 00:06:23,800 --> 00:06:25,760 Speaker 2: they have to sort of adhere to the laws around 126 00:06:25,839 --> 00:06:27,920 Speaker 2: preserving historic buildings. They have to take a lot of 127 00:06:27,920 --> 00:06:30,279 Speaker 2: steps to make sure that these buildings aren't armed. And 128 00:06:30,320 --> 00:06:32,760 Speaker 2: also the FED has said that these renovation projects will 129 00:06:32,800 --> 00:06:35,000 Speaker 2: allow them to put all their staff kind of consolidate 130 00:06:35,040 --> 00:06:37,479 Speaker 2: their staff all in one place, and that will save 131 00:06:37,560 --> 00:06:40,160 Speaker 2: money over the long term. So really like a lot 132 00:06:40,200 --> 00:06:41,840 Speaker 2: of this is in the eyes of the beholder. If 133 00:06:41,880 --> 00:06:43,839 Speaker 2: you want to kind of go after Pal and the FED, 134 00:06:44,240 --> 00:06:46,479 Speaker 2: you're using this as your opportunity. But the Fed, they're 135 00:06:46,600 --> 00:06:49,040 Speaker 2: really just pushing back against this idea that it's like 136 00:06:49,120 --> 00:06:50,159 Speaker 2: overly extraving it. 137 00:06:50,720 --> 00:06:53,840 Speaker 1: Has John, however, indicated that he might give in to 138 00:06:54,000 --> 00:06:57,360 Speaker 1: all of this pressure and actually resigned from the job 139 00:06:57,960 --> 00:06:59,240 Speaker 1: no indication whatsoever. 140 00:06:59,720 --> 00:07:02,120 Speaker 2: He has said several times previously that he plans to 141 00:07:02,160 --> 00:07:05,960 Speaker 2: serve out the duration of his chair term. And if 142 00:07:06,000 --> 00:07:08,520 Speaker 2: you take the face the FED at its word, and 143 00:07:08,600 --> 00:07:12,080 Speaker 2: they have said that Chairpal was honest in his testimony. 144 00:07:12,400 --> 00:07:15,720 Speaker 2: They've said that they are happy to be transparent about 145 00:07:15,720 --> 00:07:18,400 Speaker 2: this project and provide more information about it. They don't 146 00:07:18,400 --> 00:07:20,160 Speaker 2: feel like they've done anything wrong. So if you take 147 00:07:20,200 --> 00:07:22,480 Speaker 2: the Fed at its word, and you take what Chaerpal 148 00:07:22,520 --> 00:07:24,640 Speaker 2: has said about intending to serve out the duration of 149 00:07:24,640 --> 00:07:27,440 Speaker 2: his term, it really doesn't seem like he's going to 150 00:07:27,880 --> 00:07:29,240 Speaker 2: give into this pressure at all. 151 00:07:29,680 --> 00:07:31,720 Speaker 1: So one of the indications are that Jerome Powell will serve, 152 00:07:31,760 --> 00:07:34,160 Speaker 1: as you say, to the end of his term. Scott Bessant, 153 00:07:34,160 --> 00:07:36,800 Speaker 1: the US Treasury Secretary, has said the formal process to 154 00:07:36,840 --> 00:07:41,520 Speaker 1: find his replacement has started. When should we expect Donald 155 00:07:41,560 --> 00:07:44,559 Speaker 1: Trump to name someone? And is there then a question 156 00:07:44,640 --> 00:07:47,080 Speaker 1: that Jerome Powell becomes some sort of lame duck if 157 00:07:47,120 --> 00:07:48,960 Speaker 1: we already know who's going to replace him. 158 00:07:49,640 --> 00:07:52,240 Speaker 2: Yeah, So besson has said that this process is going 159 00:07:52,320 --> 00:07:54,760 Speaker 2: to be going on in the weeks and months, and 160 00:07:54,840 --> 00:07:57,760 Speaker 2: I think trying to game out when President Trump is 161 00:07:57,800 --> 00:08:00,760 Speaker 2: going to do anything, it's kind of not aw right. 162 00:08:00,880 --> 00:08:04,320 Speaker 2: He's known to change his mind on things, to go 163 00:08:04,360 --> 00:08:05,960 Speaker 2: back and forth on things. We've seen that on a 164 00:08:06,000 --> 00:08:09,680 Speaker 2: number of issues, and so who knows. But I will 165 00:08:09,680 --> 00:08:12,080 Speaker 2: say that an interesting question that has also come up. 166 00:08:12,160 --> 00:08:15,280 Speaker 2: So Chairpowell's term as chair is up in May twenty 167 00:08:15,280 --> 00:08:17,640 Speaker 2: twenty six, but his term as a governor on the 168 00:08:17,640 --> 00:08:20,840 Speaker 2: FED Board goes on into twenty twenty eight, and so 169 00:08:20,920 --> 00:08:23,600 Speaker 2: that actually means that Chair pal has the option to 170 00:08:23,720 --> 00:08:27,480 Speaker 2: stay on the FED Board even after his chair term 171 00:08:27,560 --> 00:08:30,800 Speaker 2: is up. And when he's been asked whether he does 172 00:08:30,840 --> 00:08:32,800 Speaker 2: intend to stay on the board even when he's no 173 00:08:32,880 --> 00:08:36,560 Speaker 2: longer chair, he has declined to answer. So that has 174 00:08:36,960 --> 00:08:39,600 Speaker 2: raised some eyebrows, like, hmm, is he is he going 175 00:08:39,679 --> 00:08:42,360 Speaker 2: to stay on the board to kind of safeguard in 176 00:08:42,400 --> 00:08:45,400 Speaker 2: case President Trump picks someone who is seen as a 177 00:08:45,400 --> 00:08:47,840 Speaker 2: potential threat to FED independence, so he can stay there 178 00:08:47,880 --> 00:08:50,600 Speaker 2: and kind of hold the line against someone like that. 179 00:08:50,760 --> 00:08:53,240 Speaker 2: And so that is another sort of wrinkle that has 180 00:08:53,280 --> 00:08:55,599 Speaker 2: come up for the Trump administration as they begin the 181 00:08:55,640 --> 00:08:58,360 Speaker 2: selection process. And you saw a Treasury secretary best and 182 00:08:58,400 --> 00:09:01,800 Speaker 2: say yesterday chairpal should lead when his chair term is up, 183 00:09:01,840 --> 00:09:04,720 Speaker 2: you should not stay because obviously if he stays on 184 00:09:04,760 --> 00:09:07,120 Speaker 2: the board, then that creates question about where the real 185 00:09:07,679 --> 00:09:11,440 Speaker 2: sort of nexus of power and influence live even after 186 00:09:11,679 --> 00:09:14,480 Speaker 2: the president names who he wants to take over the 187 00:09:14,559 --> 00:09:17,560 Speaker 2: chair role. So a lot of interesting wrinkles in this 188 00:09:17,600 --> 00:09:19,679 Speaker 2: whole process is starting to come up. 189 00:09:20,000 --> 00:09:22,600 Speaker 1: Yeah, and we'll watch the developments with interest. Our Federal 190 00:09:22,640 --> 00:09:26,120 Speaker 1: Reserve reporter Amara Amaqway, thank you very much for joining us. 191 00:09:26,720 --> 00:09:29,200 Speaker 1: For more explanations like this from our team of three 192 00:09:29,240 --> 00:09:32,319 Speaker 1: thousand journalists and analysts around the world, go to Bloomberg 193 00:09:32,320 --> 00:09:37,760 Speaker 1: dot com slash explainers. I'm Stephen Caroll. This is here's why. 194 00:09:37,920 --> 00:09:40,400 Speaker 1: I'll be back next week with more. Thanks for listening,