The Scoop
Republicans are divided over the Trump administration’s calls to meddle with the Federal Reserve’s leadership, a schism on vivid display this week as Chair Jerome Powell prepares for his second day of congressional testimony.
Multiple members of President Donald Trump’s orbit have endorsed proposals that would give the White House more control over the officials atop the central bank, including empowering the president to fire Fed governors at will and replacing Powell, whose term expires in 2026, with former Rep. Ron Paul, R-Texas. GOP lawmakers previously steered clear by focusing their attention on more limited reforms, like requiring it to base its decision-making on specific rules.
That shifted Tuesday. During Powell’s first appearance before lawmakers since Trump’s inauguration, Senate Banking Committee member Sen. Cynthia Lummis, R-Wyo., slammed the central banker for overseeing a “black hole” that “consumes information, but never releases it,” including when requested by Congress. She later implied in a post on X that Powell, who most experts agree can only be let go for legal violations or personal misconduct, should be “fired.”
Lummis told Semafor her criticism is about bank supervision, not monetary policy.
“It’s not their job to determine what businesses are good and what businesses are bad, as long as those businesses are legal,” Lummis said in an interview after the Senate hearing, harmonizing with concerns over regulatory pressure on banks to cut ties with certain customers like gun manufacturers and cryptocurrency firms. Powell “needs to get a handle on it, and if he doesn’t, we need to get new leadership.”
Like most of Lummis’ fellow Senate Banking Committee Republicans, Republicans on the House Financial Services Committee are likely to steer clear of similar calls Wednesday. It’s a tricky moment for the Fed and the new GOP majorities, who are trying to back up Trump allies while also showing awareness of the central bank’s independence.
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House Republicans’ goals on Wednesday are limited to getting Powell’s take on things like “above-target inflation,” “current monetary policy framework,” “risks to the economy and financial system,” and “pending regulations,” according to a memo on the hearing circulated internally among committee Republicans and viewed by Semafor. None of the memo’s 15 suggested questions reference the possibility of new leadership or allege unaccountability to lawmakers.
“Chairman Hill gave me the responsibility of this task force to look at the Fed and to look at how Treasury funds their operations; probably my opening one minute, and my five minutes of questions, will be focused on those issues,” Rep. Frank Lucas, R-Okla., told Semafor of his hearing plans. He’ll play a leading role at the hearing as chair of a newly created working group on monetary policy.
And Rep. Pete Sessions, R-Texas., told Semafor that he doesn’t expect leadership changes to come up at all.
“We’re more interested in the large reach, and that is the money that has been borrowed — where the money is, and how the money is getting paid back,” Sessions said.
The View From democrats
Democrats are lining up behind Powell in a show of support for central bank independence — even when doing so means putting aside longstanding differences. It doesn’t hurt that Powell is a Trump appointee, increasing the tension in the GOP over the criticism of his leadership from Republicans.
“Look, I disagree with him on monetary policy, I disagree with him on regulatory oversight of the giant banks, and I disagree with him on Fed ethics — but I have no reason to doubt that he is a principled public servant, and it is important that the Fed maintain its independence that’s clearly under threat,” the top Democrat on the Senate Banking Committee, Sen. Elizabeth Warren, D-Mass., told reporters after Tuesday’s hearing.
Eleanor’s view
Lawmakers have sway here — as former Fed Chair Ben Bernanke infamously put it, “Congress is our boss” — but it’s a long road toward building enough momentum to push through any meaningful legislative proposal. Much hinges on whether or not other Republicans take Lummis’ lead by entertaining the idea of new leadership — or continue to focus instead on less legally thorny changes.
It’s also worth noting that Senate Republicans on Tuesday trained their fire on a wide array of issues — from capital requirements to climate change. That would indicate that there’s no coordinated GOP attempt as of yet to target Powell.
Notable
- Powell testified Tuesday that the Fed will take its time on future rate cuts, saying: “We’re in a pretty good place with this economy.”
- Federal Reserve officials have already raised concerns about the potential impact of Trump’s proposed tariffs in inflation.