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President Donald Trump’s latest flirtation with firing Jerome Powell revealed that the Federal Reserve chair may be the single exception to his unlimited sway over the congressional GOP.
After Trump polled Republican lawmakers on whether he should axe the central bank chief on Tuesday night, the president backed away from the idea on Wednesday — with a notable caveat. As his administration probes the $2.5 billion renovation of the Fed’s headquarters, Trump said Powell’s firing is “highly unlikely — unless he has to leave for fraud.”
One person close to the situation told Semafor that the renovations are “definitely a point of concern” for administration officials who are scrutinizing the Fed. Unlike other regulatory officials who Trump has removed since taking office, he would likely have to fire Powell for cause; his frustration with the bank’s inaction on interest rate cuts would not qualify.
There’s just one problem: Republicans are divided about whether the costly renovation is a valid reason for dismissing Powell.
“Being wise with public resources is always critically important, I understand that,” Rep. Frank Lucas, R-Okla., who chairs the House’s task force on monetary policy, told Semafor. Lucas then aired skepticism about “where we choose to pay close attention [to] how ‘wise’ things are.”
Sen. John Kennedy, R-La., warned firing Powell would “crash” markets. More importantly, he said the president doesn’t have the authority to fire Powell.
“If they litigate it, they’ll lose,” Kennedy told Semafor. “His lawyers, if they’re doing their job, are telling him that he’ll likely lose. And the independence of the Federal Reserve is important.”
Another House Republican, who requested anonymity to discuss the renovations, aired concerns that wielding them as a basis to fire Powell could compromise the central bank’s independence. Because Powell is set to step down as chair next year but remain on the board through 2028, firing him would be the only sure way Trump could appoint a chair who is not currently on the board.
“I believe in an independent central bank, very much so,” the House Republican said. “Markets believe in that; the financial system believes in that; and it’s served America well. It makes us the strongest country in the world, because we have that independent central bank.”
One senior Republican congressional aide described the situation as “beyond f*cked.”
It’s not “as if [Powell] is handling the renovation,” plus “the building’s foundation is a mess,” the aide said. “They had to lift up the building, replace the foundation, then renovate it.”
“Seems like they just want to find any reason” to fire Powell, another Republican congressional aide said.
Markets swooned on Wednesday at the suggestion of a Powell firing even as Trump insisted that he was “not planning on doing anything.” The episode tore open a fault line that has persisted since Trump took office as he pushes for more control over the central bank amid his dissatisfaction with interest rates — and, in some instances, seizes it.
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National Economic Council Director Kevin Hassett and Senate Banking Chair Tim Scott are homing in on the Fed’s construction project, spurring Powell to ask the central bank’s inspector general to conduct its own review.
Trump himself brought up the project in the Oval Office Wednesday, calling it “sort of” a fireable offense after Republican lawmakers confirmed to Semafor that Trump showed them a draft letter firing Powell.
House Speaker Mike Johnson told reporters that he “believe[s] new leadership would be helpful” at the Fed, and “interest rates need to be adjusted.” Yet he, too, expressed doubts that Trump has the ability to fire Powell.
“I have been not happy with the leadership there, personally, but I’m honestly not sure whether that executive authority exists,” Johnson said.
Rep. Victoria Spartz, R-Ind., one of the Republicans who was in the Tuesday meeting with Trump, said she agreed Powell should face “some accountability for his handling of inflation” as well as the renovation. Still, she said, “probably he should just finish his term.”
Republicans on the House Financial Services Committee were slated to have dinner with Powell on Wednesday, two people familiar with the plans said. But that event was scrapped earlier in the day amid a shifting floor schedule.
Powell says he has no plans to step down as chair even as Trump starts the process of selecting his replacement, but he has declined to say whether he’d opt to remain on the board through 2028. Trump has reportedly entertained potential new chairs that range from Hassett to Treasury Secretary Scott Bessent to former Fed Gov. Kevin Warsh, but none of them would be options if Powell stays past 2026. Instead, he would have to pick a sitting member of the board to elevate.
Room for Disagreement
Several other Republicans say they would support Trump if he fired Powell.
Sen. Rick Scott, R-Fla., quoted Trump’s suggestion that Powell could be fired for fraud and said the White House is “frustrated,” adding that “if there was opportunity, they probably would” fire Powell. He, too, criticized the Fed building’s renovations.
“I was checking: to redo a high-end hotel, the renovation is $500 a square foot. You know what they’re spending? $1,900 a square foot,” Scott told Semafor.
Asked if that amounted to fraud, he responded: “Who knows, but it sure seems out of whack. I’m glad the White House is engaged.”
Then there’s Trump’s fixation on interest rates. Sen. Tommy Tuberville, R-Ala., said Powell is “late to the party on everything,” from waiting too long to raise interest rates during the pandemic to moving to cut them right before the election.
“President Trump, Scott Bessent … they’ll make that decision on the benefits of whether it’s good or bad if he’s gone,” Tuberville said. “I’m all for whatever he wants to do, but something’s got to change.”
The View From democrats
Sen. Elizabeth Warren, the top Democrat on the Senate Banking Committee, called the renovation probe a “pretext” for firing Powell.
“I have argued for more transparency and more oversight of the Fed for years now, but that does not include creating a pretext to try to get rid of the chairman,” Warren told Semafor. “I may disagree with the Fed on policy, but the Fed remains independent, and I support them, and I will fight any effort to undercut it.”
“Donald Trump has said over and over and over that he wants to fire Jerome Powell, and no one is fooled when Trump is suddenly interested in how much the repairs to the foundation of a building cost,” Warren added.
Notable
- The New York Times first reported that Trump on Tuesday showed lawmakers a letter firing Powell.
- CBS News first reported that Trump discussed firing Powell with the lawmakers.