1 00:00:02,520 --> 00:00:09,680 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. I'm Stephen Carroll, and 2 00:00:09,800 --> 00:00:12,399 Speaker 1: this is Here's Why, where we take one news story 3 00:00:12,480 --> 00:00:14,600 Speaker 1: and explain it in just a few minutes with our 4 00:00:14,640 --> 00:00:16,360 Speaker 1: experts here at Bloomberg. 5 00:00:19,280 --> 00:00:21,079 Speaker 2: The President sent this note to the FED. 6 00:00:21,120 --> 00:00:24,000 Speaker 1: Share It says, Jerome, you are, as usual too late. 7 00:00:24,280 --> 00:00:26,639 Speaker 2: You have cost the USA a fortune and continue to 8 00:00:26,680 --> 00:00:29,319 Speaker 2: do so, and the FED oftentimes is perceived to be 9 00:00:29,600 --> 00:00:31,320 Speaker 2: a globalist, elitist institution. 10 00:00:31,600 --> 00:00:35,800 Speaker 1: President absolutely has authority to hire a FED governor for cause, 11 00:00:36,240 --> 00:00:38,720 Speaker 1: and I think the accusations are serious. 12 00:00:38,920 --> 00:00:42,800 Speaker 2: The President's concerned about the building and those massive costs overrun, 13 00:00:42,840 --> 00:00:45,919 Speaker 2: which just tell you that there is no accountability at 14 00:00:45,920 --> 00:00:46,720 Speaker 2: that organization. 15 00:00:46,800 --> 00:00:48,960 Speaker 1: Maybe I should go to the FED. Am I allowed 16 00:00:49,000 --> 00:00:49,800 Speaker 1: to appoint myself? 17 00:00:49,840 --> 00:00:50,040 Speaker 2: Doug? 18 00:00:50,080 --> 00:00:52,360 Speaker 1: I don't know. Am I allowed to appoint myself at 19 00:00:52,360 --> 00:00:54,680 Speaker 1: the FED? I do a much better job than these people. 20 00:00:55,560 --> 00:00:58,520 Speaker 1: Donald Trump and his allies have plenty to say about 21 00:00:58,520 --> 00:01:01,760 Speaker 1: the Federal Reserve. Not much of it is good. The 22 00:01:01,840 --> 00:01:04,360 Speaker 1: US President has been clear that his goal is to 23 00:01:04,400 --> 00:01:07,480 Speaker 1: get the Central Bank to lower interest rates, but his 24 00:01:07,640 --> 00:01:12,160 Speaker 1: method has involved unprecedented attacks on the FED, insulting charge 25 00:01:12,160 --> 00:01:16,200 Speaker 1: your own Powell, criticizing a renovation project at its headquarters 26 00:01:16,520 --> 00:01:20,520 Speaker 1: and moving to fire FED Governor Lisa Cook. It's a 27 00:01:20,560 --> 00:01:24,319 Speaker 1: striking challenge to central bank independence and a developed economy. 28 00:01:24,760 --> 00:01:29,120 Speaker 1: But will it work? Here's why Trump's FED pressure campaign 29 00:01:29,520 --> 00:01:36,480 Speaker 1: may deliver. Our White House correspondent Katherine Lucy joins me. 30 00:01:36,560 --> 00:01:39,440 Speaker 1: Now for more, Catherine, can you put these actions in 31 00:01:39,560 --> 00:01:43,280 Speaker 1: context for US? Has a president ever done more to 32 00:01:43,360 --> 00:01:44,880 Speaker 1: try to influence the FED. 33 00:01:45,440 --> 00:01:49,520 Speaker 2: Presidents have had conflicts with FED chairs before, Presidents have 34 00:01:49,680 --> 00:01:54,800 Speaker 2: privately put pressure on the FED. Richard Nixon certainly pushed 35 00:01:54,840 --> 00:01:57,760 Speaker 2: the FED to keep interest rates low when he was president, 36 00:01:58,160 --> 00:02:02,800 Speaker 2: But no president has has ever tried to fire a 37 00:02:02,840 --> 00:02:05,800 Speaker 2: member of the FED board before, and so this is 38 00:02:05,920 --> 00:02:10,360 Speaker 2: a notable escalation and it really strikes at the heart 39 00:02:10,400 --> 00:02:13,160 Speaker 2: of the independence of the central Bank. 40 00:02:13,720 --> 00:02:17,720 Speaker 1: You've been writing recently about the President's Summer of revenge. 41 00:02:18,040 --> 00:02:21,440 Speaker 1: Is he using a similar strategy against others that he opposes. 42 00:02:21,680 --> 00:02:24,160 Speaker 2: You've seen a lot of moves from the President in 43 00:02:24,320 --> 00:02:26,960 Speaker 2: recent months to try and take actions against people he 44 00:02:27,080 --> 00:02:32,480 Speaker 2: perceives as enemies or as opposing his political agenda. So 45 00:02:32,560 --> 00:02:37,320 Speaker 2: we've seen things like stripping people of security clearances, investigations 46 00:02:37,360 --> 00:02:41,760 Speaker 2: into people, threats, on social media and also firing or 47 00:02:41,800 --> 00:02:47,160 Speaker 2: attempting to fire people from agencies that tend to operate independently. 48 00:02:47,320 --> 00:02:49,960 Speaker 2: So in addition to this move to try to fire 49 00:02:50,560 --> 00:02:53,200 Speaker 2: Lisa Cook on the FED board, which obviously she is 50 00:02:53,360 --> 00:02:58,520 Speaker 2: fighting in court, recently saw an FBI raid on Trump's 51 00:02:58,560 --> 00:03:02,080 Speaker 2: former National Secure the Advisor John Bolton, who has been 52 00:03:02,080 --> 00:03:05,920 Speaker 2: a high profile critic the administration. Officials have said there 53 00:03:05,919 --> 00:03:09,320 Speaker 2: are legitimate concerns about his handling a classified material, but 54 00:03:09,440 --> 00:03:12,959 Speaker 2: certainly this was perceived by some as an escalation the 55 00:03:13,320 --> 00:03:16,720 Speaker 2: other there moves against other top officials. The White House 56 00:03:16,760 --> 00:03:20,680 Speaker 2: fired the Centers for Disease Control and Prevention director just 57 00:03:20,800 --> 00:03:24,560 Speaker 2: weeks into her tenure, and he's made threats against any 58 00:03:24,639 --> 00:03:28,040 Speaker 2: number of people who he sees as criticizing him, like 59 00:03:28,200 --> 00:03:31,079 Speaker 2: Chris Christi, the former New Jersey governor who used to 60 00:03:31,080 --> 00:03:34,120 Speaker 2: be a supporter, for example. So he has made any 61 00:03:34,200 --> 00:03:38,360 Speaker 2: number of moves in recent weeks and months that I 62 00:03:38,440 --> 00:03:40,880 Speaker 2: think a lot of people see, as you know, ways 63 00:03:40,920 --> 00:03:45,360 Speaker 2: to silence or pressure people that the White House sees 64 00:03:45,360 --> 00:03:50,320 Speaker 2: as not being in line with Trump's plans and his agenda. 65 00:03:50,480 --> 00:03:54,000 Speaker 2: And he to remember, he ran a campaign saying I 66 00:03:54,040 --> 00:03:57,880 Speaker 2: will be your retribution was a line that he used 67 00:03:57,920 --> 00:04:01,120 Speaker 2: on the campaign trail a lot. Certainly, Trump and his 68 00:04:01,200 --> 00:04:07,000 Speaker 2: supporters feel that he has been subjected to unfair investigations 69 00:04:07,080 --> 00:04:10,960 Speaker 2: and prosecutions, and so some of the systems from that 70 00:04:11,160 --> 00:04:11,680 Speaker 2: as well. 71 00:04:12,400 --> 00:04:16,560 Speaker 1: Is this kind of multi pronged campaign delivering results for 72 00:04:16,600 --> 00:04:17,200 Speaker 1: the president. 73 00:04:17,920 --> 00:04:20,800 Speaker 2: Some of these moves are being countered in court. In 74 00:04:20,920 --> 00:04:22,880 Speaker 2: terms of Lisa Cook, We'll have to see what happens 75 00:04:22,920 --> 00:04:25,680 Speaker 2: with her efforts to stay on the Fed board. But 76 00:04:25,800 --> 00:04:28,479 Speaker 2: some people have been removed from their jobs. Certainly, some 77 00:04:28,520 --> 00:04:32,560 Speaker 2: people have lost security clearances or One thing the president 78 00:04:32,560 --> 00:04:35,640 Speaker 2: has done is ended Secret Service protection for the former 79 00:04:35,720 --> 00:04:38,520 Speaker 2: Vice president Kamala Harris. You know, typically that does end 80 00:04:38,520 --> 00:04:41,080 Speaker 2: at the six month mark, but she had been given 81 00:04:41,120 --> 00:04:44,679 Speaker 2: an extension on that protection. So some of these moves 82 00:04:44,720 --> 00:04:47,280 Speaker 2: are sticking, I think. I think also the concern you 83 00:04:47,279 --> 00:04:49,520 Speaker 2: hear from a lot from people who are watching this 84 00:04:49,800 --> 00:04:52,560 Speaker 2: is does this also just have a chilling effect on 85 00:04:53,320 --> 00:04:56,240 Speaker 2: critics or opponents of the president. Does this send a 86 00:04:56,279 --> 00:04:58,720 Speaker 2: message about how things are being run? 87 00:04:59,240 --> 00:05:02,599 Speaker 1: Is there any sign that the Federal Reserve is bending 88 00:05:02,640 --> 00:05:04,040 Speaker 1: to the President's pressure. 89 00:05:04,680 --> 00:05:07,200 Speaker 2: Lisa Cook is fighting this in court. They were in 90 00:05:07,279 --> 00:05:11,200 Speaker 2: court this week her lawyer is saying there is no 91 00:05:11,320 --> 00:05:14,360 Speaker 2: grounds to fire her. They're trying to get an emergency 92 00:05:14,440 --> 00:05:16,720 Speaker 2: ruling to keep her in her job. So they are 93 00:05:16,760 --> 00:05:21,159 Speaker 2: pushing back very hard and certainly fedher. Jerome Powell, who 94 00:05:21,200 --> 00:05:25,760 Speaker 2: Trump has excoriated repeatedly publicly on social media in his 95 00:05:25,839 --> 00:05:29,640 Speaker 2: comments pushing him to cut interest rates, certainly he has 96 00:05:29,680 --> 00:05:34,559 Speaker 2: not been responsive to Trump's threats. He has recently opened 97 00:05:34,560 --> 00:05:37,120 Speaker 2: the door to a potential interest rate cut in September, 98 00:05:37,160 --> 00:05:41,000 Speaker 2: but that's based on economic indicators like the labor market. 99 00:05:41,320 --> 00:05:44,599 Speaker 2: So so far we have not seen a reaction from 100 00:05:44,640 --> 00:05:48,120 Speaker 2: some of the people that Trump is pushing, But there's 101 00:05:48,120 --> 00:05:50,680 Speaker 2: also no signs that he's going to stop his campaign. 102 00:05:51,160 --> 00:05:53,960 Speaker 1: What could the President do next in his campaign against 103 00:05:53,960 --> 00:05:54,800 Speaker 1: the Federal Reserve. 104 00:05:55,360 --> 00:05:57,400 Speaker 2: Well, I think one key front is obviously how this 105 00:05:57,480 --> 00:05:59,600 Speaker 2: is going to play out in court. Both sides are 106 00:05:59,600 --> 00:06:01,600 Speaker 2: going to fight. You know, He is going to continue 107 00:06:01,600 --> 00:06:05,920 Speaker 2: to push that they had cause to fire Cook, and 108 00:06:06,279 --> 00:06:10,080 Speaker 2: this obviously could go to the Supreme Court ultimately, which 109 00:06:10,120 --> 00:06:13,240 Speaker 2: will test that theory. Trump has not let up on 110 00:06:13,279 --> 00:06:17,839 Speaker 2: his pressure on Jerome Powell in any way, and I 111 00:06:17,880 --> 00:06:21,040 Speaker 2: think that will continue, and I think you'll see that 112 00:06:21,080 --> 00:06:26,120 Speaker 2: the president does respond very strongly to market indicators. So 113 00:06:26,360 --> 00:06:28,760 Speaker 2: if he feels in the fall or in the coming 114 00:06:28,800 --> 00:06:32,039 Speaker 2: months that the economy is not going the way that 115 00:06:32,120 --> 00:06:35,360 Speaker 2: you want, you could see him escalate his anger about 116 00:06:35,880 --> 00:06:37,560 Speaker 2: rate cuts even more aggressively. 117 00:06:38,440 --> 00:06:42,360 Speaker 1: Is there anything to be learned from this exchange between 118 00:06:42,400 --> 00:06:45,680 Speaker 1: Donald Trump and the Federal Reserve in terms of a 119 00:06:45,720 --> 00:06:49,240 Speaker 1: playbook for others who might find themselves the subject of 120 00:06:49,279 --> 00:06:52,159 Speaker 1: attacks by Donald Trump of a way to respond. Is 121 00:06:52,160 --> 00:06:55,120 Speaker 1: it a good model for how to resist pressure from 122 00:06:55,120 --> 00:06:55,720 Speaker 1: the president? 123 00:06:56,320 --> 00:06:59,800 Speaker 2: What we've seen so far in Trump's presidency is that 124 00:07:00,520 --> 00:07:03,000 Speaker 2: the place where he is most likely to be checked 125 00:07:03,200 --> 00:07:06,920 Speaker 2: is in court. He doesn't mean that he has always checked. 126 00:07:06,960 --> 00:07:09,400 Speaker 2: Some things that he has done have been upheld by 127 00:07:09,400 --> 00:07:11,680 Speaker 2: the court. It's been a mixed bag, but there's been 128 00:07:11,760 --> 00:07:16,600 Speaker 2: very little pushback on from Republicans on Capitol Hill or 129 00:07:16,640 --> 00:07:20,440 Speaker 2: in other parts of government, and so fighting his moves 130 00:07:20,480 --> 00:07:23,240 Speaker 2: in the court system so far seems to be people's 131 00:07:23,280 --> 00:07:24,200 Speaker 2: best strategy. 132 00:07:25,080 --> 00:07:28,280 Speaker 1: Catherine Lucy, our White House correspondent. Thank you for more 133 00:07:28,400 --> 00:07:31,800 Speaker 1: explanations like this from our team of three thousand journalists 134 00:07:31,800 --> 00:07:34,760 Speaker 1: and analysts around the world. Go to Bloomberg dot com 135 00:07:34,800 --> 00:07:40,160 Speaker 1: slash Explainers I'm Stephen Caroll. This is here's why. I'll 136 00:07:40,160 --> 00:07:42,520 Speaker 1: be back next week with more. Thanks for listening.