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This week, Jerome Powell confirmed that he has no plans to vacate the Federal Reserve entirely after stepping down from his role as chairman next month. Despite this, some of his critics are already brainstorming strategies to persuade him otherwise, according to sources familiar with the situation.
One economist, who is closely connected to the White House and President Trump, humorously suggested revoking Powell’s parking privileges at the Fed as a means to encourage his departure. Although said in jest, the comment underscores the tensions surrounding Powell’s continued presence at the institution.
On Wednesday, the 73-year-old Powell announced his intention to remain a member of the Fed’s Board of Governors once his chairmanship concludes on May 15. He cited ongoing “legal attacks on the Fed” that he believes are undermining the institution as part of his reason for staying. These remarks come amidst efforts by Trump to pursue legal action against Powell, accusing him of misleading Congress regarding alleged cost overruns in the $2.5 billion renovation of the Fed’s headquarters.
Despite Powell’s assertions and backing from figures like Senator Thom Tillis of North Carolina, who have dismissed these allegations as unfounded, some Wall Street insiders still advocate for his immediate exit from the central bank. Powell is eligible to serve as a governor until early 2028, but the debate over his future role continues to stir strong opinions.
While Powell and others including Sen. Thom Tillis (R-NC) have called the Fed HQ allegations “bogus,” some observers on Wall Street would nevertheless like to see Powell out of the central bank ASAP.
“Maybe they should also put his office in the basement of the Fed where water is seeping because of all the work they’re doing on the building,” the economist told On The Money.
How seriously the Trump Administration or Kevin Warsh, the president’s pick to succeed Powell, will take these suggestions is unclear.
A spokesman for the Fed had no comment. Approached for comment, a White House press rep pointed to a Truth Social post by the president that claimed, “Jerome ‘Too Late’ Powell wants to stay at the Fed because he can’t get a job anywhere else – Nobody wants him.”.
In fact, the key sticking point is the potential for an indictment over the Fed HQ issue by Trump’s Justice Department under Jeanine Pirro, people who know Powell tell On The Money.
“If everything is clean, he will leave shortly,” said one Wall Street executive with ties to Powell. “If there is some kind of litigation against him or the institution he will stay as a governor for up to two years.”
Pirro did little to help “clean” things up when, as she announced she was handing over the probe to the Fed’s inspector general, she added that she “will not hesitate to restart a criminal investigation should the facts warrant doing so.”
The problem is that Trump wants Powell out after sparring with him for years over his refusal to cut rates as quickly as the president would like. Warsh – known as an inflation hawk – may cut rates but also has vowed to reduce the size of the Fed’s balance sheet, which he believes has been a bigger culprit for inflation remaining above its 2% target.
But the Fed chair can’t unilaterally achieve his agenda, particularly when it comes to interest rate cuts. He needs buy-in from the Fed’s policy-making Federal Open Market Committee, where Powell, if he should stay, will have a seat and could be a pivotal vote against cutting rates.
That is, unless Team Trump makes life miserable for him as governor.
“My betting is he might stay for a bit but will decide to leave,” said the same economist close to Trump who will recommend rescinding Powell’s parking space or parking his office in the basement.