Lower those rates, darn it! Or else.

Lower those rates, darn it! Or else.

Trump just won’t give up his witch hunt targeting Fed chairman Jerome Powell. Despite the Department of Justice’s subpoenas thrown out, the US attorney for the District of Columbia Judge Jeanine Pirro has continued the harassment of Powell. A couple members of her staff paid a surprise visit to the renovation of the Fed’s headquarters. They were turned away after being told that they could not enter without preclearance. Pirro issued a statement saying “Any construction project that has cost overruns of almost 80 percent over the original construction budget deserves some serious review. And these people are in charge of monetary policy in the United States?” Of course, Pirro did not comment on Trump’s ballroom being over 100 percent over budget. The Fed’s outside attorney objected to the visit in a letter to Pirro’s office saying “Should you wish to challenge that finding, the courts provide an avenue for you; it is not appropriate for you to try to circumvent it. I ask that you commit not to seek to communicate with my client outside the presence of counsel.”

Of course, Pirro will ignore the objection. I believe it is obvious what she is doing. She is trying to become the next attorney general. Recall that Trump was unhappy with Pam (Blondie) Bondi for her lack of aggressive pursuit of Trump’s adversaries when those cases were of dubious merit. Not so with Judge Jeanine! Trump has praised her for having the courage to continue the investigation of Powell. Some courage!

Sen. Thom Tillis (R-NC) has said that hearings for Trump’s nominee to replace Powell as chairman would not be held until the harassment of Powell was stopped. He relented and those hearing will take place starting on April 21. Trump, of course, has dismissed Tillis’ stance saying when asked if Tillis would vote for Warsh “He might not, but that’s why Tillis is no longer a senator.” Tillis is retiring but is still a senator and responded “I’m not dead yet.”

However, the hearings do not guarantee that Warsh’s nomination will get out of committee as long as the investigation of Powell continues. Powell’s term as chairman ends in May and it is likely that Warsh’s confirmation may not be completed by then. That would mean that Powell would stay as chairman until Warsh is confirmed. Powell also has given no indication that he will resign his position as a Fed governor which has two more years to run.

Trump had a cow saying that if Powell won’t resign then he will fire him. Powell says that Trump does not have the legal authority and that he has no intention of leaving the Fed until the investigation is over with “finality.” Trump said the investigation will continue even if it obstructs the confirmation of Kevin Warsh. Trump also said “If he’s (Powell) not leaving on time, I’ve held back firing him, I’ve wanted to fire him, but I hate to be controversial, you know. I want to be uncontroversial.” Trump “uncontroversial”? That will be the day.

But let us suppose that Warsh’s nomination is on-going when Powell is supposed to step down as chairman. What then? Let’s then assume that Trump says “You are fired!” Then what? Nothing if the Supreme Court has ruled that Trump cannot fire a Fed governor. But if the Supreme Court rules, however unlikely, that Powell can be fired as chairman – but not as a governor – then Trump cannot name a sitting governor as a replacement (likely Waller or Bowman). Instead, the Fed governors themselves are responsible for naming one of their own as an interim until a permanent successor can be confirmed. Then Powell who would still be a governor could be named interim in the ultimate put down of the president.

Trump’s effort to fire Fed governor Lisa Cook is still on the Supreme Court’s docket. The outcome of that case will go a long way in determining if the president can replace a Fed governor. I hope that Trump loses this case. It is shortsighted on his part and demonstrates even more that Trump is about Trump with little regard to the consequences of his actions. If he prevails, then in essence the Fed loses its independence and becomes a vassal of the executive. You can just imagine some future president replacing some or all of the seven governors if they do not bend to his wishes – capricious or not. Hey, how about that zero Fed funds rate, y’all?