Trump’s legacy will be his nominees to the Supreme Court and the Federal Reserve. Much has been said and written about the conservative political right turn America will take because of his nominees to the Supreme Court. Not as much has been said about the economic turn the economy will take by his nomination of the Federal Reserve Chair and a majority of the board.
It’s the economy that obliterated the middle class and it is the economy that is over-drawing and bankrupting people’s bank accounts. It is also the economy that put most people into the 99% group and propelled the 1% to untold riches at the expense of the 99%. What can make the difference is Trump’s appointees to the Federal Reserve. After all, it’s the Fed that sets interest rates, regulates financial institutions, plays a key role in stimulating the economy, encourage job growth, controls inflation and recoveries from recessions.
Trump has the unprecedented opportunity to reshape the world’s most powerful central bank in the coming months. He will be appointing as many as four members to the seven member board – including its chairperson and vice chair. And that’s in addition to his first nominee investment fund manager Randal Quarles, who is awaiting Senate confirmation.
The current Fed Chair Janet L. Yellin’s four year term expires in February and it is not known whether she wants to stay, he will re-nominate her, or replace her with either his top economic advisor Gary Cohn, or Kevin Warsh, a former Fed governor affiliated with Stanford’s Hoover Institution.
During the presidential campaign Trump accused Yellin, an Obama appointee, of keeping the Fed’s benchmark interest rate “artificially low” to help fellow democrats Obama and Clinton and was “very political” and “should be ashamed of herself.” However, his daughter Ivanka appears to be a supporter as are the Democrats in Congress that would support her and smooth the way for her re-nomination.
Cohn had the inside track but appears to have lost it after publicly criticizing Trump’s response to the Charlottesville White Supremacist-Neo Nazi protest at which a protestor was killed when a rally protestor rammed his car into the crowd of counter-protestors.
Warsh has the support of Trump financial supporters and many Republicans in Congress and appears to be the wild card favorite.
With Trump’s penchant for doing the unpredictable, who he will nominate as chair is being studied and analyzed harder than whether the Fed will or will not raise interest rates. Stay tuned!
What is worrisome is why the highly respected Vice Chairman Stanley Fischer, the former head of the Israel Central Bank, unexpectedly resigned. What does he know that we don’t? Hopefully, whatever it is, the new Fed Chair, Vice Chair and nominees will fix for the benefit of all Americans and not just the 1%.