Donald Trump’s allies are reportedly preparing proposals to erode the independence of the Federal Reserve if the presumptive Republican presidential nominee returns to the White House. The objective would consist in particular of installing supporters of the former president in the monetary policy committee, to reduce the autonomy of the institution.
According to the Wall Street Journal, Donald Trump’s allies have developed a project likely to limit the Fed’s room for maneuver in setting monetary policy and in banking regulation.
A group of allies of the former president wrote a document of around ten pages, which notably recommends that Donald Trump be consulted before any decision on rates and that he could end the mandate of the current president of the Fed , Jerome Powell, before its planned end in 2026, according to the American daily.
The WSJ was unable to determine whether Donald Trump is aware of these proposals, but “authoritative sources” believe that these thoughts have received his assent.
The remote verbal jousting between Donald Trump and Jerome Powell, whom he appointed in 2017, remained famous during the former president’s first term.
An institution more than a century old
The Federal Reserve System, established by Congress in 1913, consists of the Federal Reserve Board, based in Washington, 12 regional Federal Reserve banks located throughout the country, and the Federal Open Committee. market (FOMC), which includes both Federal Reserve board members and regional Bank executives. The Fed’s board has seven members, including a president, two vice presidents – one responsible for monetary policy and the other for bank supervision – and four other governors. All are appointed by the president and must be confirmed by the Senate.
Donald Trump managed to appoint four board members during his presidency and elevated Jerome Powell to the role of Fed Chairman. All of his appointees, including Jerome Powell and current governors Michelle Bowman and Christopher Waller, have upheld the Fed’s tradition of independence.
Each regional Fed bank is headed by a president appointed by a subcommittee of the bank’s board of directors. The FOMC, which has the essential role of setting interest rate policy, is made up of the seven governors, the president of the Federal Reserve Bank of New York and four other presidents of regional banks, according to a rotation system.
The current composition
Fed governors are appointed by the president and confirmed by the Senate for a 14-year term, or for the remainder of a previous incumbent’s 14-year term. Terms are staggered every two years, with the next one scheduled for 2026. Fed chairs and vice chairs are appointed to four-year terms that coincide with their governorship. They generally do not remain governors if they are not reappointed. Mr. Powell’s term expires in May 2026, and that of the two vice presidents ends during the term of the next president of the United States.
Presidents in office
Fed bank presidents are chosen by the six non-bank members of their board of directors and must be approved by the Fed board. They can hold office until the mandatory retirement age of 65 or, if appointed after 55, for 10 years or until they reach the age of 75.
The term of all current bank presidents ends in February 2026, at which point the board of governors will consider appointing them for a further five-year period. Historically, this process of renewal of mandates has not led to a change at the head of the institution, but it is not a law but a custom. This is the list of regional Fed bank presidents, with the term expiration dates for the five of them that will expire during the term of the next president of the United States.
