The Wall Street Journal broke some news on Saturday afternoon which appears to have created a dilemma for the get rid of Powell at any cost crowd inside the White House:
How Bessent Made the Case to Trump Against Firing Fed Chair Powell
In the excerpt below from their exclusive story, one can see the problem that Trump and his minions are facing now:
Bessent’s reasons for avoiding a messy dispute over Powell’s final 10 months as Fed chair focused on a few themes: the possible effects on the economy and markets, the prospect that the Fed is already moving toward cutting interest rates later this year, and the likely political and legal obstacles that such a move would face, these people said.
Bessent said firing Powell was unnecessary because the economy is doing well and markets have responded positively to the president’s policies, according to one of the people familiar with the matter. Bessent also reminded Trump that Fed officials have signaled they could cut rates twice before year’s end, this person said.
After the massive fit the bond market had after the initial Liberation Day announcement, the idea of disrupting bond and equity markets with an equally if not more divisive attack on Federal Reserve Chairman Jay Powell has been first and foremost on US Treasury Secretary Scott Bessent’s mind as the story indicates.
But the debate about replacing Mr. Powell has flared online with wild stories about potential replacements which legally are not eligible to become Federal Reserve Board Chairperson. For example, rumors persist that Treasury Secretary Scott Bessent or NEC (National Economic Council) Director Kevin Hassett are two of the members of Trump’s inner circle under consideration.
Another individual being discussed is former Federal Reserve Governor Kevin Warsh as this tabloid media column from Charlie Gasparino highlights:
The race to succeed Fed Chair Jerome Powell just got weirder
Why is it getting weirder?
This excerpt sums it up with the antics of chaos that engulfs the White House and Trump enjoys to keep markets guessing:
While Wall Street grapples with the president’s threats to fire the central bank’s boss, the rumor mill surrounding his possible successor has yielded a dizzying surprise of its own, On The Money has learned.
Bill Pulte, the current head of the Federal Housing Finance Authority that runs mortgage giants Fannie Mae and Freddie Mac, has lately surfaced as a possible pick alongside the “two Kevins” — Kevin Hassett, director of the National Economic Council, and Kevin Warsh, a Stanford professor and fellow at the right-leaning Hoover Institute.
Of course there is zero chance that Pulte would ever become Fed Chair and the other two are not eligible either, as neither is anyone else who is not a currently sitting member of the Board of Governors. Despite the fantasy talk from the administration that they can “name whoever the hell they want” and the financial bubblevision media doing the same to keep ratings up during the dog days of summer, there is a legal reality that I believe Secretary Bessent was trying to remind the administration about.
For those that do not read, watch, or study history the legal application of how the US President selects a new Federal Reserve Chairman is fairly strict. Meet 12, US Code Section 242:
Remember this as these conversations carry on and on about replacements for Jay Powell, as it is nothing more than blather to promote clicks, bubblevision ratings, or fake stories in the media. But also remember that legally, President Trump can demote a Federal Reserve Chairman of the Board without cause as President Truman did in 1948 over the policy debate on inflation.
Needless to say, before I could even spellcheck, review, and publish this story the President had to reply to this story from the WSJ on his Truth Social platform:
My only response is “ugh” not just for grammar worse than my own, but for a needless attack on Jay Powell again which adds voracity to the story originated by Nick Timiraos (who still has me blocked on X) who is aptly nicknamed the “Fed Whisperer” for a reason.
The only recommendation this author has is buckle up for the Truth Social storm of postings from the President after there is no rate cut on July 30th by the FOMC and a probably somewhat neutral to slightly hawkish statement from Fed members including Powell at Jackson Hole in late August.
