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The chairman of the Federal Reserve Jerome Powell He announced on Wednesday that he will remain a member of the Fed's Board of Governors after his term as chairman ends next month, although he added that he will not be a “shadow Fed chairman.”
The outgoing Fed chairman hosted his final news conference after the Federal Open Market Committee (FOMC) voted to hold interest rates in the current range of 3.5% to 3.75%. The news conference came hours after the Senate Banking Committee voted to advance his successor as Fed chairman, former Fed Governor Kevin Warsh.
Powell said he intends to continue working as a member of the group The Board of Governors of the Fed “there is a time to be decided” and he was asked during a press conference about how he will conduct himself as a governor and not have too much influence on the system.
“That's just what I won't do, the shadow chair thing. I don't know what the exact details will be, but I'm going back to being governor. I respect the role of the chairman,” said Powell. “I have been governor for six years, and I know what that is like.
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Fed Chairman Jerome Powell said he does not plan to act as a “shadow Fed chair” and wants to help build consensus where he can. (Daniel Heuer/Bloomberg via Getty Images)
“I had a good seat in the front, especially with Chair Yellenwhom I was close to. When I worked with Chairman Bernanke for two years, I was young at the time. So I got a sense of what it was, and I had a real sympathy for how difficult it is to get that group to agree,” he explained.
“I always felt that I didn't want to add that unnecessarily, and that means trying to support the chair or the direction the chair wants to go. And if you can't, you can't. I think that's the way it's always been worked there because the chair only has one vote and the ability to develop consensus,” said Powell.
“I propose to be a very constructive participant in that process, really out of respect for the office of the chairman.”
In his opening remarks, Powell said he plans to “keep a low profile as governor,” and explained, “There is only one chairman of the Federal Reserve Board. When Kevin Warsh is confirmed and sworn in, he will be that chair. Once he is sworn in as chairman of the board, his new colleagues will elect him to chair the FOMC again.”
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Powell said he will continue to be a member of the Fed's Board of Governors until the investigation is finally and transparently closed. (Kent Nishimura/Reuters)
Powell said that while he planned to retire at the end of his presidency, a Justice Department investigation launched by the The Trump administration made him change those plans because he was concerned about threats to the independence of the Fed to conduct monetary policy without political pressure.
In January, US District Attorney for the District of Columbia Jeanine Pirro issued a subpoena to the Fed as part of a criminal investigation into whether Powell misled Congress about the Fed's expensive renovation project at its DC headquarters.
Powell said this is the investigation motivated by politicsand the courts dismissed the DOJ's subpoenas as “pretexts” to pressure him to lower interest rates or step down.
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Powell said he planned to retire at the end of his tenure before the DOJ investigation. (Anna Moneymaker/Getty Images)
Pirro announced Friday that the DOJ is dropping its investigation and allowing the Fed's inspector generalMichael Horowitz, to handle this matter. Pirro said he would not hesitate to “reopen a criminal investigation if the truth warrants it,” and the DOJ told Powell and the Feds over the weekend that it would only reopen if the IG sends a criminal warrant. The move allowed Warsh's nomination to move forward in the Senate after the Republican senator raised his block over concerns about the Fed's independence.
“My concern is about the series of legal attacks on the Fed, which threatens our ability to conduct monetary policy independently of political factors,” Powell said. “These legal actions by the administration are unprecedented in our 113-year history, and there are ongoing threats of more such actions.”
He added that the Fed's ability to operate independently “is so important to our economy, to the people we serve, that they can rely, over time, on a central bank that operates that way without political influence. It's part of the whole foundation of this wonderful economy that we have. It's one of the many reasons why The US economy the envy of the world.”
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Trump appointed Powell to serve as Fed chairman starting in 2018, although he continued to repeatedly threaten to fire him for not cutting interest rates. (Saul Loeb/AFP via Getty Images)
At Wednesday's news conference, Powell was asked if he would stay at the Fed after his chairmanship is a political act that influences the board's actions. He replied that the legal investigation has made him unable to do anything but continue until it is really finished and he does not want to interfere in the affairs. Functions of the Fed when Warsh became the chair.
“I live literally because of the actions taken. I had planned for a long time to retire. And you know, the things that happened, in fact three months ago, I did not have the choice to stay until I see them, at least for a long time,” explained Powell. “Besides, I don't see how this thing will interfere. My intention is not to interfere.”
Powell's term as a member of the Fed's Board of Governors continues until January 31, 2028, although he did not say whether he would consider staying out of his term and insisted that he would leave when the investigation “is over and it's over and it's transparent, and I'm waiting for that, and I'll leave when I think I should.”
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Powell won't be the first former Fed chairman to stay on as governor after his term as chairman expires. Mariner Eccles, for whom one of the Federal Reserve's DC headquarters buildings is named, served as chairman of the Fed from 1934 to 1948 and remained a member of the Fed's Board of Governors until 1951.
