Powell waiting for investigation "to be well and truly over" before leaving the board
Despite the announcement last week that the investigation into Federal Reserve chair Jerome Powell would be dropped by the Justice Department, Powell isn't convinced that the investigation is truly over.
Because there has been talk that the investigation could be resumed, Powell stated on Wednesday that he will remain on the board after his time as chair ends next month, although he will keep a low profile.
“I've said that I will not leave the Board until this investigation is well and truly over with transparency and finality, and I stand by that,” Powell said. “I am encouraged by recent developments and watching the remaining steps in this process carefully. My decisions on these matters will continue to be guided entirely by what I believe is in the best interest of the institution and the people we serve.
“After my term as chair ends on May 15th, I will continue to serve as a governor for a period of time to be determined. I plan to keep a low profile as a governor. There's only one Chair of the Federal Reserve Board. When Kevin Warsh is confirmed and sworn in, he will be that Chair."
'Unprecedented' legal attacks
Powell said that it is important for him to stay to combat what he termed 'unprecedented' attacks on the central bank by the DOJ and the Trump administration.
“My concern is really about the series of legal attacks on the Fed, which threaten our ability to conduct monetary policy without considering political factors,” Powell said. “These legal actions by the administration are unprecedented in the 113-year history, and there are ongoing threats of additional actions.
“I worry these attacks are battering the institution and putting at risk the thing that matters to the public, which is the ability to conduct monetary policy without taking into consideration political factors. It is so important for our economy and the people that we serve that they can depend on a central bank that operates that way, free of political influence. It's part of the absolute foundation of this amazing economy that we have.”
Powell was asked if staying meant he was taking a political stance by not allowing President Donald Trump to appoint his successor to the board.
“I don't see that at all,” Powell said. “As I mentioned, I'm literally staying because of the actions that have been taken. I had long planned to retire. The things that have happened in the last three months have left me no choice but to stay until I see them through. I don't see how this will interfere. My intention is not to interfere.”
Congratulating his successor
Powell offered his congratulations to Kevin Warsh, who is expected to be confirmed as the new Fed chair in the coming days. He also said he wasn’t sure when he would exit the Fed board.
“First, I want to congratulate Kevin Warsh on his advancement out of the Senate banking committee this morning,” Powell said. “This is an important step forward, and I wish him well as that process continues. In terms of when I will leave, I will leave when I think it's appropriate to do so. I'm waiting for the investigation to be well and truly over with finality and transparency. And I'm waiting for that. And I will leave when I think it's appropriate to do so."
He said it is not only the law that guarantees the Fed's independence, but also customs that ensure that the central bank avoids political influences. Powell believes that independence is still at risk.
"Part of it is the law, but it goes beyond that," Powell said. "There's a set of customs. There's a boundary line between the Fed and the administration, between the Fed and the Treasury Department. We need to continue to respect those boundaries. We haven't wanted to use our tools to achieve goals that are really clearly outside our mandate. I think it's at risk. I think this institution is being battered over these things.
"Successful advanced economy countries have a strong set of protections around their central bank. I am confident that the Fed will continue to make it's decision based on rigorous analysis and not political considerations. But we've had to fight for it. It is the an institution full of human beings who work super hard to get things right for the benefit of public. We're all human. Don't expect perfection. But do expect us to make decisions without political considerations and the very best analysis we can bring."
