One of the possible avenues for Donald Trump to gain full control of the Federal Reserve has just been closed. The board of governors of the central bank has unanimously re-elected 11 of the 12 presidents of the regional branches of the Fed -the other is vacant- more than two months before their terms expire, on February 28 of next year. In this way, they guarantee that the president will not be able to ‘touch’ one of the two groups that participate – in his case, on a rotating basis – in the monetary policy meetings that set interest rates.
In the last hours, the White House had opened the door to demand that the presidents of regional banks have to have been registered at least three years in the states that each of these bodies supervises. For example, the president of the San Francisco Fed should have been registered in California. This requirement would knock down all of them, since the leaders of the central bank are chosen by a merit-based competition among economists and sector experts from across the country.
That had been the last maneuver to try to take control of the central bankafter the failure – for the moment – to remove Governor Lisa Cookbased on dubious accusations and without evidence of alleged fraud. If you have moved forward, Trump could have begun to dismiss governors without limit, creating a governing board ‘tailored’ to the president. But justice has overturned these maneuvers and the Supreme Court, which is normally quick to agree with the Government, has decided to postpone the resolution of this case for several months, giving signs that this time it will break with Trump.
The Federal Open Market Committee (FOMC), the body in charge of setting rates, has twelve members, seven of whom are governors and five are regional presidents. The president of the New York Fed has a permanent seat, while the rest rotate each year. However, non-voting regional leaders do participate in meetings and debates on the health of the macroeconomy, especially to provide detailed information about their jurisdiction.
After the ‘shield’ of the regional presidents, Trump will only be able to appoint the president of the institution, who, despite his leadership power within the FOMC, does not stop having a single vote: If you try to force deeper rate cuts than most governors want, they could vote against it.
So, John Williams will continue to head the New York FedMary Daly of San Francisco, Austan Goolsbee of Chicago, Susan Collins of Boston, Anna Paulson of Philadelphia, Thomas Barkin of Richmond, Lorie Logan of Dallas, Neel Kashkari of Mineápolis, Beth Hammack of Cleveland, Alberto Musalem of San Luis and Jeffrey Schmid of Kansas City.
Atlanta Fed President Raphael Bostic announced on November 12 that he would leave the issuing institute once his term concluded in February. Bostic, 59, had served since 2017 as the first African-American and openly gay president of a regional bank.
