Thread by @PeterContiBrown

A thread on the chaos and futility that will occur if Trump attempts to fire Powell, building on this oped from earlier this month. /1

wsj.com/articles/can-t…

As I noted, the law isn’t clear. Trump can probably de-designate a Fed Governor as Board Chair, but not fire the Governor. That would violate a deeply held norm in Fed governance, but then, norms and Trump aren’t fast friends. /2

What immediate effect? Market chaos and Jay Powell still the Fed Chair. Because the even curiouser fact of Fed governance is that there are two Fed Chairs, not one. The Board Chair (controlled by President) and FOMC Chair, controlled by the FOMC /3

And the FOMC can elect any of their members to lead them. Rich Clarida (current Vice Chair) would lead on regulation and testify before Congress. The FOMC could elect Jay Powell to lead monetary policy, the only thing Trump cares about. /4

The next chapter would depend on the Senate. Would they confirm a Mulvaney or a Kushner or a Warsh to succeed Powell? I hope not. I hope they would say “We will wait until Powell’s term at the FOMC is up according to our expectation of a four-year chairmanship.” But who knows? /5

The fact would be that, confirmed or not, the two chairmanships that each Fed chair has held since 1935 would be separated for the first time. It would feed theories (already rampant) of unaccountability and deep state manipulation. /6

And it would represent a governance crisis that would damage the Fed, damage the presidency, and damage the nation. Let’s hope Trump’s impetuous narcissism doesn’t take us here. /7