Big-bank CEOs continued to defend the Federal Reserve’s independence Wednesday as the central bank’s chair, Jerome Powell, weathered a whipsaw of rumors regarding his job security.
The latest squeeze began Tuesday night, when President Donald Trump showed a draft of a letter firing Powell during a meeting about cryptocurrency legislation with roughly a dozen House Republicans, CBS News reported, citing anonymous sources.
“I talked to them about the concept of firing him,” Trump confirmed. “I said, ‘What do you think?’ Almost all of them said I should. But I’m more conservative than they are.”
But by midday Wednesday, Trump decelerated.
“We’re not planning on doing it,” the president said during a question-and-answer session with reporters at the Oval Office. “I don’t rule out anything … but I think it’s highly unlikely, unless he has to leave for fraud.”
That’s the allegation hard-line supporters are investigating – in relation to a renovation at two Fed offices in Washington, D.C., that has gone at least $600 million over budget.
“I mean it’s possible there’s fraud involved with the $2.5 billion renovation,” Trump said Wednesday, according to The New York Times.
That parrots a charge the Federal Housing Finance Agency director levied against the renovation in a Wednesday post on X.
“As someone with deep experience in construction, I am requesting to tour the Fed building and the new, ridiculous ‘renovations,’ which I believe are riddled with fraud,” FHFA Director Bill Pulte wrote on the social network.
Pulte’s calls for Powell’s ouster are nothing new. They’ve spanned at least a month.
“There are a lot of bad ideas out there. But the president firing the chairman of the Fed, or, should I say, trying to fire him — because that’s not clear to me at all that he could succeed — that’s among the worst ideas,” Roger Altman, founder of the investment bank Evercore, told CNBC on Wednesday.
At least four other bank CEOs appear to concur.
“I think central bank independence – not just here in the United States but around the world – has served us incredibly well,” Goldman Sachs CEO David Solomon told CNBC on Wednesday. “I think regulation and supervision are different. But with respect to monetary policy, I think central bank independence, Fed independence, is very important and it’s something we should fight to preserve.”
“The Fed is an independent agency, and they are meant to be outside the purview of the executive, and Congress,” Bank of America CEO Brian Moynihan told Bloomberg on Wednesday. “They are called to task and monitored and reviewed. The reality is they were set up to be independent.”
“The independence of the Federal Reserve drives its credibility,” Citi CEO Jane Fraser said in a statement. “It is critical to the effectiveness of our capital markets and U.S. competitiveness.”
Goldman, Citi and Bank of America reported second-quarter earnings this week, as did its larger competitor, JPMorgan Chase. That bank’s CEO, Jamie Dimonon Tuesday similarly called Fed independence “absolutely critical.”
“Playing around with the Fed can often have adverse consequences – the absolute opposite of what you might be hoping for,” Dimon said.
Moynihan, for one, emphasized that Trump will be due to select a new Fed chair next year. Powell’s term as chair is up in May 2026, though he can stay on as a Fed governor through 2028. However, Moynihan warned, markets will react if Trump were to replace Powell “prematurely.”
‘Working the refs’
At least one Republican lawmaker, Rep. Anna Paulina Luna of Florida, emerged from Tuesday’s crypto meeting with Trump convinced that the president would take action against Powell.
“Jerome Powell is going to be fired,” Luna posted Tuesday night on X. “Firing is imminent.”
She doubled down Wednesday. “If Jerome doesn’t lower interest rates, he is going to get fired. Bookmark this,” she wrote on X. “The ball is in Powell’s court.”
Luna isn’t the only Washington official making basketball references in relation to the Fed chair job.
Treasury Secretary Scott Bessent equated Trump’s testing the waters with regard to Powell as “working the refs,” akin to a coach, during a game, attempting to gain a window into a referee’s thinking.
Tara Sinclair, an economist at George Washington University, called it “playing chicken.”
Sen. Elizabeth Warren, D-MA, said the veil is thin between Trump’s motives and actions.
“Nobody is fooled by this pretext to fire Chair Powell,” she said. “When his initial attempts to bully Powell failed, Trump and Republicans in Congress suddenly decided to look into how much the Fed is spending on building renovations.”
Warren added: “Markets will tank if [Trump] does [fire Powell].”
Trump himself cited that talking point Wednesday in an interview with Real America’s Voice.
“They say it would disrupt the market if I did,” Trump said, adding that if Powell “wants to resign, that would be up to him.”
At one point Wednesday, Trump said he hadn’t had a letter drafted to fire Powell.
However, two people with knowledge of the matter told The New York Times that Pulte gave Trump a draft of the letter earlier this week.
While the anti-Powell drumbeat continues among Trump’s more fervent supporters – Deputy White House Chief of Staff James Blair on Tuesday posted on X an image of Powell as Marie Antoinette with the caption, “Let them eat basis points” – other observers have noted that Trump doesn’t have the right to fire the Fed chief without cause.
Wolfe Research on Wednesday issued a note outlining three scenarios if Trump chooses to fire Powell. In one, Powell remains the de facto chair of the Fed while Trump seeks a judicial order to remove him.
In a second, Powell steps down voluntarily and sues to be reinstated.
In a third, Trump seeks Powell’s removal through executive action.
“I think, ultimately, this would be resolved in the courts,” Altman said.
Peter Conti-Brown, a professor at the University of Pennsylvania’s Wharton School, said in any attempt to remove Powell, “fraud and gross negligence must be bona fide.”
“It is clear to everyone watching this saga, and will be clear to the courts reviewing it after the fact, that President Trump is not interested in Powell’s management of the renovation project,” Conti-Brown told The New York Times. “Trump simply wants interest rates to be lower, he bears a strong and deep animus toward Chair Powell because interest rates are not lower, and his advisers have now cooked up a pretextual scheme to attempt to circumvent the law.”
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