The Federal Reserve will not publicly disclose communications between its chairman and President Donald Trump unless they are scheduled telephone calls or meetings.
The lack of transparency in communication between the two adds to the larger intrigue over the extent to which Trump exerts influence over Fed Chairman Kevin Warsh, whom he appointed to replace Jerome Powell in large part because Powell refused to do his bidding on interest rates.
Trump’s name is notably absent from Warsh’s recently released public calendar for August, which includes dozens of calls and meetings with officials and CEOs, even though the president said in early August that he had recently spoken with Warsh.
Instead, the calendar now includes a disclaimer that “Board member calendars reflect scheduled meetings and calls,” indicating that cold calls from Trump would not be listed if they occurred. It is not clear when the disclaimer was added, or why.
The lack of disclosure could aggravate the long-running complaint among members of Congress that the Fed, which is supposed to be an independent agency, is too much under the influence of the executive branch.
The Wall Street Journal reported that Trump has called the chairman “repeatedly,” although Trump has pushed back on that characterization. Still, Trump did acknowledge he spoke to Warsh “one time, briefly, a few days ago.”
“But they made it sound like I live and breathe — you know, I speak to Kevin all the time, every time. I spoke to him one time,” Trump said. No calls with the president were logged in Trump’s calendar for either August or July.
The Federal Reserve declined to comment to the Washington Examiner about this story. The White House referred the Washington Examiner to Trump’s public comments.
Presidents and Fed chairs typically have little interaction, given a long-standing norm that the executive branch allows the central bank to conduct monetary policy independently.
But Trump repeatedly pressured Powell to cut interest rates, has attempted to fire Fed Governor Lisa Cook, and recently said Powell should be “forced to resign” after the former Fed chairman and current governor was cleared of criminal wrongdoing related to cost overruns by the central bank inspector general. Those actions led to complaints from Democrats that Trump was undermining the Fed’s independence. Democrats have also said that Warsh is not sufficiently independent of Trump.
Notably, Powell’s past public calendars do list calls with Trump. For instance, the logs from April 2019 show a call between Trump and Powell at 9 p.m., when Powell was attending the House Democratic Caucus’s Issues Conference. It lasted just 5 minutes.
Powell’s public calendar shows another 5-minute call between him and Trump on March 8 of that same year. In another example, Powell’s calendar for May 2019 lists a call with Trump from 4:42 p.m. to 4:47 p.m.
The Washington Examiner could not determine whether either of those calls between Powell and Trump was “scheduled” or if they were cold calls from the president, as listed in the logs at the time in the spirit of transparency.
The Fed webpage that lists all of Powell’s public calendars currently includes the same disclaimer as the webpage that lists all of Warsh’s public calendars, that they “reflect scheduled meetings and calls.”
But archived versions of that same webpage from as recently as July do not include the same disclaimer at the bottom.
Transparency and independence of the Fed were key themes during Warsh’s confirmation hearing. Some Fed watchers say it is in the public interest to disclose calls between Trump and Warsh on the calendar, even if they were cold calls and not scheduled.
“I think more transparency and disclosure about these issues would be a good thing,” Mark Hamrick, chief economic analyst for the Hamrick Brief, told the Washington Examiner.
“At the same time, I can understand why the administration and maybe the Federal Reserve Board are looking to limit to some degree public disclosure of this,” he added.
Disclosing unscheduled calls could damage the Fed’s mission if it led to the revelation of multiple calls without explaining their content. Markets might get spooked if they saw Trump and Warsh talking frequently.
“If I’m the Federal Reserve, and I’m being a little hush-hush about that, what I’m probably trying to do is downplay any concerns that the president might be putting pressure on Warsh,” Ryan Young, a senior economist at the Competitive Enterprise Institute, told the Washington Examiner.
“And if I’m the president, the one thing that seems to have spooked Trump so far is the bond markets,” Young said. “That’s what got him to walk back ‘Liberation Day’ tariffs. That’s what got him to walk back some of the more egregious pressures he put against Powell. So I can see why they would want to keep it on the down low as well.”
Democrats have been very critical of Trump’s interference with the Fed, including in response to reports of communication between Trump and Warsh. For instance, U.S. Sens. Chris Van Hollen (D-MD), Angela Alsobrooks (D-MD), and Elizabeth Warren (D-MA) sent a letter to Warsh expressing concern that calls with the president were not included in the public record. They pushed for information about reports of the calls, and cited previous disclosures on the calendar from Powell.
“To clarify your interactions with President Trump, please either confirm to us in writing that you have had no contacts with the President since being sworn in, or amend your publicly released calendars to disclose any such contacts,” they wrote. “We also request a public read-out of any conversations with the President.”
But Republicans have also complained that the Fed lacks independence from the executive branch under Democratic administrations. For example, in 2015, House Financial Services Committee Chairman Jeb Hensarling (R-TX) told then-Fed Chairwoman Janet Yellen that the “greatest threat” to Fed independence comes from the executive branch, rather than from Congress.
“While the Federal Reserve chair testifies publicly before this committee twice a year, she meets weekly with the Treasury secretary in private,” Hensarling said during an opening statement. “And for decades there has been a revolving door between Treasury officials and Fed officials which continues even today.”
David Wessel, a senior fellow in economic studies at Brookings Institution and director of the Hutchins Center on Fiscal and Monetary Policy, told the Washington Examiner that he thinks calls between Trump and Warsh should be in the calendar, although he also noted the “scheduled” disclaimer on the webpage.
“I do think the Fed should disclose calls between the president and the Fed chair when it releases the chair’s calendar, just as it does the chair’s meetings with the Treasury secretary and the CEO of JPMorgan Chase,” Wessell wrote over email. “Not doing so when we all know there have been such calls makes it look like the Fed has something to hide — and it doesn’t.”
Speculation about calls between the two aside, Warsh still led a unanimous vote to raise interest rates at the last meeting despite Trump pushing for the opposite, lending credence to the idea that the Fed remains independent of Trump’s influence.
Wessel said he doesn’t think that the two talking undermines Fed independence.
“I don’t think conversations between the Fed chair and the president necessarily undermine the Fed’s independence,” Wessel said. “What matters is what the Fed does — and the Warsh Fed voted 12-0 to raise interest rates even though everyone knew President Trump didn’t want that. It doesn’t look like Chair Warsh is taking orders from the White House.”
Warsh himself declined to discuss communication with Trump when asked by the Washington Examiner during the most recent Fed press conference.
“I don’t have anything for you on discussions with the president,” Warsh said.
SPIKE IN MORTGAGE RATES COMPOUNDS INFLATION AND DEBT WOES
He also emphasized Fed independence.
“Part of the independence of the Federal Reserve is that we stay in our lane,” the chairman said. “Independence is a two-way street. We let people that do trade policy and fiscal policy stay in their lane, too. That’s how we can stand up here and call them [the] way we see them.”
Continue reading...
[ H/T Washington Examiner ]
