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Powell Says He Will Remain on Fed Board Until Investigation Ends, Warns Legal Attacks Threaten Independence
Summary
Chair Jerome Powell said he will continue to serve as a governor after his term as chair ends, citing recent legal actions against the Fed and saying he will stay until a Justice Department investigation is concluded with 'finality and transparency.' He warned that legal assaults on the Fed risk politicizing monetary policy.
Jerome Powell said at his final press conference as chair that he will remain on the Board of Governors as a governor until an ongoing investigation is resolved with transparency and finality, and that recent legal actions against the Fed threaten its ability to make monetary policy free from political considerations.
“This is my last press conference as chair,” Powell said, and later: “I will not leave the board until this investigation is well and truly over with transparency and finality.” He told reporters that the U.S. attorney in the District of Columbia had closed a criminal investigation and that the Department of Justice had said it would not reopen the inquiry unless the Fed’s inspector general made a criminal referral.
Powell called the legal actions “unprecedented in our 113 year history” and said they risk “battering the institution” and interfering with the Fed’s capacity to set policy without political influence. He said those concerns were a key factor in his decision to delay stepping down as chair and to remain on the Board for a period to be determined.
When asked whether staying on the board is a political act that would deny the president a majority, Powell replied, “I don't see that at all,” and said his motivation is to see the investigation concluded and to protect the institution’s ability to act on the basis of analysis rather than politics.
Powell also noted the nomination of Kevin Warsh had advanced in the Senate Banking Committee and acknowledged that, once confirmed and sworn in as chair, Warsh would be the sole chair. Powell said he plans to keep a low profile if he serves as a governor and that he does not intend to be a “shadow chair.”
Powell's statements put the spotlight on the Fed’s institutional independence and the legal and political pressures surrounding leadership transitions; he urged courts, customs and law to safeguard the Fed’s ability to act on economic data.
