The Supreme Court justices on Wednesday will consider the legality of Trump’s bid to remove Fed governor Lisa Cook, whom the courts have allowed to continue serving on the Fed while Trump’s attempt to fire her is litigated.
Powell’s plan to attend the court’s oral arguments is a potent symbol of the administration’s ongoing clash with the Fed following US Department of Justice threats to pursue a criminal investigation of him. Powell called the threat a “pretext” to pressure him over monetary policy.
Democratic senators Elizabeth Warren and Dick Durbin on Tuesday called on the Trump administration to turn over records related to the probe, including any communications between the Justice Department, the Treasury Department, and the White House about Powell, Cook, and the Fed’s interest-rate decisions.
The effort to fire Cook over alleged misstatements on mortgage documents has been similarly slammed as cover for administration efforts to either get interest rates lowered or open more seats on the Fed’s Board of Governors for Trump to fill.
“I actually think that’s a mistake,” Bessent said in an interview with CNBC, referring to Powell’s plan to attend the hearing. “If you’re trying not to politicise the Fed, for the Fed chair to be sitting there, trying to put his thumb on the scale, is a real mistake.”
Critics of the Republican president have expressed concern that Trump’s actions and rhetoric could jeopardise the independence of the US central bank.
To be buffered from political influence, Fed governors serve 14-year terms, and can only be removed “for cause,” a standard that has never been tested in court but is considered to exclude firing over policy disagreements.
Cook has not been charged with any civil or criminal violations over the mortgages she received before her time at the Fed began.
The tension over the Fed’s independence has escalated as Trump nears the choice of a nominee to succeed Powell when his term as the central bank’s top policymaker ends in May.
Bessent told CNBC a decision could come as early as next week.