Posted on 11/28/2018 1:28:02 PM PST by SeekAndFind
In recent weeks, Trump criticized Federal Reserve Chairman Jerome Powell several times. He doesn’t like that Powell is leading the Fed to raise interest rates.
Past presidents avoided such comments so they wouldn’t appear to be interfering. But Trump doesn’t care about appearances.
The Fed is somewhat insulated from electoral politics. The chair and board members have fixed terms. Its composition changes slowly... but it doesn’t have to.
Tucked away deep inside the Fed’s founding law is a provision Trump could use to completely rebuild the Federal Reserve Board of Governors.
Markets should pay attention. I don’t think they are.
A common perception, even among Fed experts, is that presidents can’t fire the chair and board of governors once they take office. They’re thought to be like the Supreme Court in that regard, although they don’t serve for life.
But that’s not quite correct.
The Federal Reserve Act doesn’t explicitly give the U.S. president power to fire the Fed board members. But section 10 has a mysterious little phrase indicating it’s at least possible.
“…thereafter each member shall hold office for a term of fourteen years from the expiration of the term of his predecessor, unless sooner removed for cause by the President.”
That’s all it says on the subject, as far as I can tell. The Act doesn’t define what the word “cause” would entail. But Congress clearly thought the U.S. president should be able to remove board members before their terms expire, under certain conditions.
This legislative time bomb has been lurking in there for decades. Now we have a president who loves exercising unilateral power in ways his predecessors did not.
(Excerpt) Read more at forbes.com ...
A very good point.
In my view Trump is the greatest strategic mind of all time, but no matter how wise and courageous he is, history tells us time and time again the perils of fighting on too many fronts.
The CIA, FBI and the corrupt State Department must come first!
That’s why their won’t be an audit.
The Fed is audited every year by an outside firm. No big deal.
The 'audit' most anti-Fed people want is to have politicians examine and second guess the Fed's decision making process.
Our politicians have done such a good job with our fiscal policy, what with $21T in debt and a $1T annual deficit, I can see why we would want them making our monetary policy too. /s
RE: Seems that the law says the President can fire the fed chairman for cause. Since “For cause” was not defined by congress it means whatever the President determines it means.
What ever that “For cause” clause means, it CANNOT be because the President does not like the Fed’s monetary policy. If that were the case, why bother appointing a Fed Chair in the first place? He would be in effect NOT BE INDEPENDENT. Which means, the President might as well BE the Fed chair and set his own monetary policy.
A more satisfactory understanding of the “for cause” phrase would mean corruption or self-enrichment due to holding that position.
For instance, if it can be proven that the Fed chairperson or his family members or close friends were buying and selling bonds based on their KNOWLEDGE of how the Fed chair will be setting interest rates, THAT would be reason to fire him.
Who owns the Federal Reserve?
Honest Question.
Maybe that's because Greenspan was gone 3 years before Obama took office.
He was also succeed by Bernanke, not Yellen.
I understand that they are trying to normalise rates, but the talk of 4 rate raises next year was a little much in this environment. Trump had every right to jawbone the Fed.
President Lyndon Johnson actually physically attacked the head of the Fed back in the 60s. Threw him up against a wall baccause he was raising interest rates:)
“The Fed is audited every year by an outside firm. No big deal.”
How do we know that the “outside” auditor is not bought and paid for by the Fed? The “outside” auditor needs to be investigated and audited by an “outside” investigator, yes?
We have reason to be concerned that the Fed is inflating away middle class wealth.
The Federal Reserve System has a number of facets, such as regulation, policy setting and research which are clearly 'owned' by the public just like any other agency.
The regional Banks are a hybrid. Their capital is supplied by the chartered commercial banks in the region who are required to buy stock in the Bank, so there is an element of private ownership, but all of the profits from the system go to the federal government and the member banks get a fixed dividend on their investment in their regional Bank.
The governance of the system is via a board nominated by the President and the regional member banks can also elect some board members of their local Bank.
Given that all of the profits from the system go to the public, it's essentially public ownership.
All of this is easily found information. Do you have an underlying question?
“Tucked away deep inside the Fed’s founding law is a provision Trump could use to completely rebuild the Federal Reserve Board of Governors”.
Former Presidential candidate Charles Collins said that there is a provision in the founding documents that would the Fed to be bought out for $60 million. Interesting.
Also, reading “The Creature from Jeykell Island, a second look at the Federal Reserve” should be mandatory reading.
“It seems that the “For cause” clause means corruption or personal gain ( e.g., buying or selling bonds knowing what you personally will do in terms of interest rates ).”
Or, quite plausibly, “cause” could also mean that the President has reason to believe that the Fed is making politically-motivated decisions, rather than acting neutrally, in the national interest. POTUS Trump has said that he believes that the Fed is trying to sabotage his economic agenda — and there is some evidence of that. (Actually, given the depth and breadth of the “resistance”; there’s plenty of reason to believe malfeasance could be involved.)
There is, no doubt, extensive common-law on the meaning of “with cause” — from many different cases. In the absence of clarity in the legislative record, that will be the deciding factor (IMHO as a non-lawyer).
“Well, that IS the question. Is the Federal Reserve a part of the Executive Branch?”
It’s a private banking cartel that lends paper (money) into circulation. In other words money is debt when its created. How is that debt going to be paid off?
“The Creature from Jeykell Island, A Second Look at the Federal Reserve”
Every American should read this.
The Fed is not part of the executive branch.
Each Fed bank is audited by a big CPA firm every year.
If I remember correctly there are several Fed openings now and coming up so Trump can remake the Fed oversight. Why not include the head guy.
Neat trick considering Greenspan retired as Fed Chair in 2006.
...and replaced him with Janet Yellen because she was a “dove” on interest rates.
You're forgetting that Ben Bernanke was in there for 8 years following Greenspan.
The Media liars will never remind you of this.
Gee, I wonder why? </sarcasm>
Trump appointed the head guy.
They have an independent Inspector General just like every other federal agency.
Given that they don't use the same auditor every year there would have to be a whole lot of people in on the buy-off conspiracy.
We have reason to be concerned that the Fed is inflating away middle class wealth.
Well, then you should be pissed at Trump because he's basically telling them, "screw inflation, keep rates low".
Either way, an audit's only going to tell you that they followed their procedures and that the numbers balance. It won't speak to policy.
Honest Question.
The member banks, though the Federal government gets all the profits individual banks generate.
I'm sure the courts will have a say in that.
Wrong.
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