A business professor at the distinguished University of Pennsylvania’s Wharton School painted a frightening scenario of "market chaos" if President Donald Trump fires Federal Reserve Chairman Jerome Powell, reports Bloomberg.
In a series of tweets, Professor Peter Conti-Brown responded to Trump's anger with Powell after the Fed raised interest rates, hinting he might want the chairman replaced.
According to Conti-Brown, "The law isn’t clear. Trump can probably de-designate a Fed Governor as Board Chair, but not fire the Governor. That would violate a deeply held norm in Fed governance, but then, norms and Trump aren’t fast friends.”
He then added, "What immediate effect? Market chaos and Jay Powell still the Fed Chair. Because the even curiouser fact of Fed governance is that there are two Fed Chairs, not one. The Board Chair (controlled by President) and FOMC Chair, controlled by the FOMC.”
Conti-Brown then speculated that Trump could appoint someone close to him who will do his bidding, including Budget Chief Mick Mulvaney or -- bizarrely, but not unheard of for the president -- his son-in-law Jared Kushner.
"The next chapter would depend on the Senate. Would they confirm a Mulvaney or a Kushner or a [Kevin] Warsh to succeed Powell? I hope not. I hope they would say ‘We will wait until Powell’s term at the FOMC is up according to our expectation of a four-year chairmanship.’ But who knows?” he tweeted.
He later added, "The fact would be that, confirmed or not, the two chairmanships that each Fed chair has held since 1935 would be separated for the first time. It would feed theories (already rampant) of unaccountability and deep state manipulation.”
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