The News
Oklahoma Rep. Frank Lucas, the longest serving Republican on the House Financial Services Committee, called for bipartisan legislation to protect the Federal Reserve’s independence from political interference.
Speaking at Semafor’s World Economic Summit Wednesday, Lucas, who chairs the committee’s monetary policy taskforce, underlined the importance of an independent central bank.
“I would suggest, if my Democrat colleagues agree with me, that reinforcing the Fed’s independence is a critically important issue, then I think we can achieve an understanding there legislatively,” Lucas said.
Lucas’ comments come as President Donald Trump launched a pressure campaign this week urging the Fed to cut interest rates. The president has gone as far as to threaten Powell’s dismissal – but reversed course yesterday, stating he had “no intention of firing” the Fed chair.
Lucas argued that monetary policy decisions are not made exclusively by the chair — they’re decided collectively by the Fed’s board of governors, as well as regional bank presidents.
While a recent Supreme Court ruling has supported the Trump administration’s executive order allowing the president to remove members of independent agencies, Lucas said he thinks the Fed won’t be impacted. The 1913 Federal Reserve Act was “very tightly written,” he said.
“I’m not so certain that it would apply to the chairman of the Federal Reserve,” he added.
In this article:
Know More
The Oklahoma Republican also expressed concern about the decline in the number of primary dealers in the market for US Treasuries.
“We’re moving eight times as much paper, but yet we have half the principal dealers who are managing that flow,” he said, adding that the taskforce will be examining “what were the decisions made that got us to the point where financial institutions don’t want to participate.”
The House’s committees are also set to start work on Trump’s legislative agenda, with a House Financial Services panel markup on April 30.
The House panel has been tasked with finding $1 billion in savings in the federal regulatory agencies it oversees, including entities like the embattled Consumer Financial Protection Bureau, as well as the Fed and the FDIC.
“Almost every Republican has pledged to undo the CFPB, almost every Republican [has pledged] to step the Fed back from the responsibilities dumped on them,” Lucas said. “There’ll be savings. … But I think the people who will be affected by the changes that are a part of these resource savings processes we’ll find it to be a positive experience.”
The Semafor View
The energy transition is changing, not ending. Renewable and fossil-fuel production are at record highs. Clean energy is cheaper than oil drilling, and Big Tech’s appetite for power is growing exponentially. Investments into new fuel sources and green tech are unlikely to wind down any time soon, while countries are increasingly concerned with energy independence.