Can Jay Powell Make It Through the Weekend?

Can Jay Powell Make It Through the Weekend?

By Larry Kudlow | RealClearPolitics.com

AP

Is the Fed chairman, Jay Powell, going to make it through the weekend? There is talk that he is being forced to resign.

President Trump, of course, is on his case daily for not dropping interest rates in line with low inflation.

Just a few moments ago, the head of the Federal Housing Finance Agency that regulates Fannie Mae and Freddie Mac and oversees the 11 federal home loan banks, William Pulte, issued a statement, saying: “I’m encouraged by reports that Jerome Powell is considering resigning. I think this will be the right decision for America, and the economy will boom.”

Yesterday, the Office of Management and Budget’s director, Russ Vought, condemned Mr. Powell for his gross mismanagement of what Mr. Vought calls the palace of Versailles.

Mr. Vought said: “We saw Chairman Powell. He was too late to recognize inflation, and now he’s too late to lower rates. And the Fed has just mismanaged the institution. And we see that the extent to which they’ve been operating at losses for a number of years now is for the first time in their history.”

He added: “And then you just see a very practical example when you go to the nation’s mall. You see the construction of this palace, in the words of one former official, upwards of $2.5 billion, massive cost overrun.”

And this $2.5 billion monstrosity of Mr. Powell’s is already over budget by $700 million.

Mr. Vought second-guessed Mr. Powell’s Senate testimony that there’s no VIP dining room, no new marble, no special elevators, no new water features, no bee hives, and no roof terrace garden in the Fed’s renovated office complex.

Mr. Vought noted that the Fed’s Taj Mahal is way out of compliance with the National Capital Planning Act.

Mr. Powell has long argued that he can’t be replaced except “for cause.”

Yet this kind of blatant financial mismanagement over the Fed’s new building and the renovations of the old building — mismanagement that Mr. Powell denied under oath — could well represent sufficient “cause” to force his resignation, or even be fired by Mr. Trump.

Meanwhile, economists are pointing out that the Fed is hemorrhaging cash as its interest expenses exceed interest taken in.

And their $6 trillion-plus bond portfolio is underwater by $1.1 trillion.

This has all the earmarks of the bankruptcy of the Silicon Valley Bank, that went under in March of 2023 — and almost pulled the financial system down with it.

So, now the question is: Can Mr. Powell even make it through the weekend?

***

Larry Kudlow is a columnist for the New York Sun. From Mr. Kudlow’s broadcast on Fox Business Network.

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SOURCE

Header featured image (edited) credit: Jack Gruber, USA TODAY article tease/ public card. Emphasis added by (TLB)

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