Is Trump about to create the next great financial crisis?<\/a><\/p>\nAfter just five months in power, US President Donald Trump predictably has driven a wrecking ball through the foundations of American society. In recent weeks, he’s re-opened an old front from his first term.<\/p>\n
Mr Trump has seized on that provision, indicating that Mr Powell’s handling of an extensive renovation project on two buildings in Washington could be grounds to take the unprecedented and possibly legally dubious step of firing him.<\/p>\n
The project has been underway for years, going back to Mr Trump’s first term. But it only recently caught the White House’s attention.<\/p>\n
Ousting Powell risks setting off market panic<\/p>\n
The Fed chair has been an obstacle in Mr Trump’s efforts to gain total control over the executive branch.<\/p>\n
Mr Powell and his board have the dual mandate of maximising employment and keeping prices stable, a task that can require them to make politically unpopular moves such as raising interest rates to hold inflation in check.<\/p>\n
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Mr Powell has found himself facing the brunt of Mr Trump’s displeasure. (Reuters: Kevin Mohatt)<\/p>\n
The general theory is that keeping the Fed free from the influence of the White House \u2014 other than for nominations of Fed officials \u2014 allows it to fulfil its mission based on what the economy needs, instead of what a politician wants.<\/p>\n
An attempt to remove Mr Powell from his job before his term ends would undercut the Fed’s longstanding independence from day-to-day politics and could lead to higher inflation, higher interest rates and a weaker economy.<\/p>\n
A headquarters more than 90 years old<\/p>\n
The Fed says its main headquarters, known as the Marriner S Eccles Building, was in dire need of an upgrade because its electrical, plumbing and air conditioning systems, among others, are nearly obsolete and some date back to the building’s construction in the 1930s.<\/p>\n
The renovation will also remove asbestos, lead and other hazardous elements and update the building with modern electrical and communications systems.<\/p>\n
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The facade of the Marriner S Eccles Federal Reserve Board Building under construction. (Reuters: Andrew Harnik\/Pool)<\/p>\n
The Fed says there has been periodic maintenance to the structures but adds this is the first “comprehensive renovation”.<\/p>\n
Trump administration officials have criticised the Fed over the project’s expense, which has reached $US2.5 billion ($3.8 billion), about $600 million more than was originally budgeted.<\/p>\n
Russ Vought, the administration’s top budget adviser, wrote Mr Powell a letter that said Mr Trump was “extremely troubled” about the Fed’s “ostentatious overhaul” of its facilities.<\/p>\n
The Fed says the renovations will reduce costs “over time” because it will be able to consolidate its roughly 3,000 Washington-based employees into fewer buildings and will no longer need to rent as much extra space as it does now.<\/p>\n
White House makes another plan of attack<\/p>\n
The Fed’s changes to its building plans have opened it up to another line of attack: White House officials have suggested the Fed violated the terms of the approval it received from a local planning commission by changing its plans.<\/p>\n
In its September 2021 approval of the project, the National Capital Planning Commission said it “Commends” the Fed for “fully engaging partner federal agencies”.<\/p>\n
But because the Fed changed its plans, the administration has indicated it needed to go back to the commission for a separate approval.<\/p>\n
Markets brace for more pain as Trump takes on Powell<\/a><\/p>\nUS President Donald Trump has again rattled global investment markets, this time with his threats to interfere with the independence of America’s central bank.\u00a0<\/p>\n
Essentially, White House officials are saying Mr Powell is being reckless with taxpayer money because of the cost of the renovation, but they are also accusing him of acting unethically by scaling back the project to save money.<\/p>\n
James Blair, the White House deputy chief of staff whom Mr Trump named to the commission, said in a post on X that Mr Powell’s June congressional testimony “leads me to conclude the project is not in alignment with plans submitted to & approved by the National Capital Planning Commission in 2021”.<\/p>\n
Mr Blair said he intended to review materials from the Fed on how the approved 2021 renovation plans had changed and circulate a letter among his colleagues on the commission that would go to Fed officials.<\/p>\n
AP<\/p>\n","protected":false},"excerpt":{"rendered":"After months of criticising US Federal Reserve chair Jerome Powell, President Donald Trump took the fight to his…\n","protected":false},"author":2,"featured_media":20296,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[64,63,99,2490,176,21095,21096,21097],"class_list":["post-20295","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-au","tag-australia","tag-business","tag-donald-trump","tag-federal-reserve","tag-jeremy-powell","tag-us-fed","tag-us-federal-reserve"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/20295","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=20295"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/20295\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/20296"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=20295"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=20295"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=20295"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}