Latest news with #KevinHassett
Washington Post
20 hours ago
- Business
- Washington Post
Can the Fed stay independent? Trump-era adviser may put it to the test.
White House economic adviser Kevin Hassett drew laughter from a roomful of economists in late March when he launched into an attack on wind turbines, blaming them for killing birds, in a riff that echoed President Donald Trump. The off-the-cuff moment, at an event hosted by the Brookings Institution, stood out not just for the reaction, but for what it signaled about Hassett. Hassett built his career in Washington as a fairly mainstream free market economist, advising GOP presidential contenders Mitt Romney and John McCain, and pushing for a carbon tax on coal and gasoline to curb greenhouse gas emissions. Some audience members said they were surprised to hear Hassett mocking windmills, a mainstay of climate policy, according to two people who attended the event, who spoke on the condition of anonymity because it was off the record. 'I was surprised to hear him say that kind of thing in front of a group of economists, most of whom he's known for decades,' one of the people said. Hassett, director of the National Economic Council, has emerged as a leading contender to succeed Jerome H. Powell as chair of the Federal Reserve, raising questions among Fed watchers about whether Powell's successor will be truly independent of the White House. Hassett has shifted his views to align more closely with Trump's on key issues at the forefront of Trump's economic agenda, including immigration and trade. The Fed's credibility depends on its independence from political pressure and investors' belief that it will raise rates if necessary to keep inflation in check. But Trump has said he wants a Fed chief willing to cut interest rates sharply to ease the cost of financing rising deficits, and Hassett has a track record of adapting to Trump's desires. Markets are watching closely. Neil Dutta of Renaissance Macro Research said Trump's insistence on a Fed chair more closely aligned with his beliefs could leave Wall Street anxious about anyone who gets the job. 'Trump is going about this in such a way that it tarnishes anybody going in the door,' Dutta said. If investors come to believe the next Fed chair will act as an extension of Trump's political will, rather than as an independent steward of monetary policy, they will probably demand higher yields on U.S. government debt to compensate for the expectations of higher inflation. That could push up longer-term borrowing costs across the economy, even if the Fed bows to pressure from the White House to cut its short-term benchmark rate. Hassett is one of four top contenders to replace Powell, whose term expires in May, part of a fluid selection process that is still under discussion; a pick could be named in coming weeks. The others include former Fed governor Kevin Warsh, Treasury Secretary Scott Bessent and Fed governor Christopher Waller. White House spokesman Kush Desai said Trump has a deep bench of qualified individuals to nominate. 'Americans can look forward to the President nominating someone who will restore competence and confidence with the Federal Reserve,' he said in a statement. A request for comment from Hassett, directly, was not returned. Trump has often gravitated toward advisers who show loyalty, and Hassett ranks among his longest-serving economic aides, as former chairman of the Council of Economic Advisers from 2017 to 2019. An expert on the link between taxation and investment, he played a key role providing economic justification for Trump's massive tax and spending bill that became law this month. But Hassett hasn't always held the views he now espouses. Back in 2013, during his time as an economist at the American Enterprise Institute, Hassett argued that doubling legal immigration would boost U.S. growth. He spoke in favor of expanded immigration again in 2019, as he left the first Trump White House. In 2006, he wrote that he opposed building a border fence between the United States and Mexico. More recently, he has supported the Trump administration's tougher stance on immigration and tighter enforcement of borders. In addition to sealing off the U.S.-Mexico border, the White House's termination of multiple temporary humanitarian immigration programs threatens to strip more than a million immigrants of their status and work authorization, according to immigration experts. 'It's 100 percent important that we secure our borders,' Hassett said recently on 'Unmuted,' the podcast hosted by Sen. Marsha Blackburn (R-Tennessee). 'The illegals were coming into the country and taking low wage jobs and driving down the wages of people who were legally residents here. … This border security policy is really advantaging people who are citizens of this country.' Since Trump's first term, Hassett also has backed the president's aggressive use of tariffs, even though his earlier writings warned about the risks of protectionism. One article blamed the Smoot-Hawley tariffs in 1930 for helping to deepen the Great Depression. Another criticized agricultural subsidies and trade barriers in developed nations for stifling the growth of the agricultural industry in poor nations. In another, he supported free trade agreements with Colombia, Panama and South Korea. A fourth article blamed the 2008 financial crisis on, among other things, protectionist rhetoric from Barack Obama. Hassett also once warned against 'China bashing,' writing in 2010 that blaming Beijing for the United States' economic woes was a political distraction from needed domestic revisions. Despite his past warnings about protectionism, Hassett has become a vocal defender of Trump's tariff strategy. On ABC's 'This Week' last weekend, he praised Trump's tough negotiating style. New import levies are generating enormous revenue, haven't hurt U.S. consumers and are paid for by foreign firms, he said. White House spokesman Desai said that it's not surprising that the president's NEC director agrees with the president's economic policies, which he said Trump has successfully implemented 'to tame inflation, create hundreds of thousands of jobs, and secure trillions in historic investment commitments.' More recently, Hassett's views have shifted on the Fed and Powell. Though he previously said a half-point rate cut that the Fed made in September 'made a great deal of sense' based on worries of a slowing labor market, he now says the Fed under Powell acted in a political fashion to help Democrats. 'Jay Powell is the person who cut rates right ahead of the election to help Kamala Harris,' he said last month on Fox Business. 'He is a person who has been basically doing whatever it is that Elizabeth Warren wants him to do.' While Powell's term as Fed chairman ends next spring, he can remain as one of seven central bank governors until early 2028. Whomever Trump appoints as Fed chairman will not alone decide interest rates and is just one voice on a 19-person committee of Fed officials who participate in policy meetings. But the Fed chair does hold significant sway on the panel. Lately, the White House has seized on the $2.5 billion renovation of the Fed's headquarters along the National Mall, with officials accusing Powell of either misleading Congress or failing to properly notify a local planning commission about design changes. Trump even floated the idea of firing Powell over the issue this week, though his legal authority to do so is questionable and it remains to be seen if he will follow through. Powell and the Fed have defended the project, which has been plagued by cost overruns, and say they didn't believe their modest design changes needed to be resubmitted to the planning commission, based on its guidelines. For decades, investors assumed Fed chairs would set policy based on economic data, not political demands. But that assumption will no longer hold for whoever replaces Powell, said Andy Laperriere, head of U.S. policy at Piper Sandler. That loss of faith could have significant consequences for financial markets, he said. 'We will operate with a different assumption,' Laperriere said. 'There's going to be a presumption that, at least to a degree, this person will bow to political pressure.'
New York Post
2 days ago
- Business
- New York Post
The race to succeed Fed Chair Jerome Powell just got weirder
Federal Reserve Chair Jerome Powell's wild ride with President Trump took a few turns down Crazy Street a while ago, of course – but that doesn't mean the stomach-churning trip is over. While Wall Street grapples with the president's threats to fire the central bank's boss, the rumor mill surrounding his possible successor has yielded a dizzying surprise of its own, On The Money has learned. Bill Pulte, the current head of the Federal Housing Finance Authority that runs mortgage giants Fannie Mae and Freddie Mac, has lately surfaced as a possible pick alongside the 'two Kevins' – Kevin Hassett, director of the National Economic Council; and Kevin Warsh, a Stanford professor and fellow at the right-leaning Hoover Institute. 3 While Wall Street grapples with the president's threats to fire the central bank's boss, the rumor mill surrounding his possible successor has yielded a dizzying surprise of its own. From left Bill Pulte, Kevin Warsh and Kevin Hassett Let's be clear – this Pulte rumor is not getting a lot of credence. Pulte is not an economist. He has a degree in broadcast journalism. He is 37 years old. Yet his name oddly began bouncing around the outer edge of the rumor mill after he posted on social media last week that the current Fed chair might step down. Advertisement Yes, Pulte runs an agency that oversees some $7 trillion in loans. He's also the scion of the Pulte family that runs the big residential construction company now known as the Pulte Group. He worked in private equity. But his social media feed shows he also tapped into the meme stock craze, even if he was careful not to give specific buy recs. While I kind of like the idea of a meme-stock guy running the Fed just for comedic value, the markets would probably puke with interest rates on the 10 and 30-year bond exploding. Advertisement On the other hand, we all know Trump loves easy money (he hates Powell for not being easier with it) and has made some unconventional choices for his cabinet in the past (cf. Matt Gaetz, Pete Hegseth, RFK Jr., etc., etc.). It's probably nothing, of course. Has to be, right? Just one more thing to make the suits on Wall Street sweat a little harder this summer. 3 Kevin Hassett is a smart economist who's also good on TV — a plus in Trump's world. Getty Images Back to reality (we hope?). Kevin Hassett is a smart economist. He co-authored the 1999 book 'Dow 36,0000' predicting a massive bull market in stocks. The markets subsequently fell with the dot-com bust, but the prediction was highly prescient, with the down closing Wednesday over 44,000. Advertisement Hassett is also good on TV — a plus in Trump world, but again, the question becomes whether he will be seen as a rubber-stamp on interest rate policy given his loyalty to the president and whether that will lead to bond market turmoil. That brings us to the best choice for the job, Kevin Warsh, who seems to have it all. He's camera ready, and he has both the professional chops to do the job having been on the Fed's board of governors during the 2008 financial crisis. 3 As reported, Treasury Secretary Scott Bessent is leading the search, and could pick himself. AFP via Getty Images He's said to be close with Trump who has leaned on him over the years on monetary policy issues. Another plus: Warsh has been a critic of Jerome Powell's handling of interest rate policy. Seems like a shoe-in for Trump right? Well maybe not. Warsh's Powell critique is mainly over the Fed chair missing the boat on inflation back in 2021 and not raising interest rates fast enough. He would run a less interventionist Fed if he had his druthers, which might not be to The Donald's liking given the president's obsession with lower short term rates. Advertisement All that said, Warsh would make a really good Fed chair and he and Trump have a bond, I am told. Trump does pick people for top jobs he likes. As reported, Treasury Secretary Scott Bessent is leading the search, and could pick himself, which would be interesting to watch as that controversy unfolds. Bessent is highly qualified, though. He made his mark on Wall Street as a savvy hedge fund trader, worked for George Soros, the 94-year-old left-wing financier, who made his own fortune back in the day for shorting (betting against) the pound sterling and 'breaking' the Bank of England during the UK currency crisis. In other words Bessent understands monetary policy as well as anyone and Trump obviously trusts his economic knowledge since he's heading his trade negotiations. His baggage will be making money – maybe too much of it as a speculator. Can't wait for those confirmation hearings.
The National
2 days ago
- Business
- The National
Who is in the running to succeed Jerome Powell as Fed chair?
Replacing Federal Reserve Chair Jerome Powell is not a question of if, but when. Speculation over who could succeed Mr Powell ramped up this week following reports that President Donald Trump was considering firing the Fed chair – an unprecedented action. Mr Powell's term expires in May 2026. Mr Trump said it was unlikely he will try to fire Mr Powell and will instead wait out the remainder of his term. The US President has thus far not attempted to oust Mr Powell, but the race to replace him has already begun. He has considered naming Mr Powell's successor by September or even sooner, the Wall Street Journal reported last month. Such an extended period could lead to confusion in the markets should a 'shadow Fed chair' emerge ahead of the end of Mr Powell's term. But Mr Trump has become increasingly irate with Mr Powell for not cutting interest rates. Mr Trump has made clear that anyone who wants the job in Foggy Bottom must support low interest rates. Here is a look at the reported candidates to replace Mr Powell: Kevin Hassett National Economic Council Kevin Hassett is one of Mr Trump's longest-serving economic aides. Mr Hassett held two roles during Mr Trump's first term including as chair of the Council of Economic Advisors. He was also the economic architect of the Abraham Accords. Before rejoining the White House this year, Mr Hassett was the global director of research for Affinity Partners, a private equity firm led by Jared Kushner, Mr Trump's son-in-law. He was previously director of economic policy studies at the conservative think tank American Enterprise Institute. Mr Hassett also served as economic adviser to John McCain, George Bush and Mitt Romney during their presidential campaigns. Kevin Warsh Former Federal Reserve governor Kevin Warsh served as former Fed chair Ben Bernanke's liaison between Washington and Wall Street during the global financial crisis. Mr Warsh has become increasingly critical about the Powell Fed within the last year, accusing the current board of 'mission creep' earlier in May. Speaking to CNBC on Thursday, the former Fed governor criticised the central bank for worrying that Mr Trump's tariffs policies could lead to an inflation resurgence. 'If they were a very credible central bank, they could say, 'We're looking past this one-off change in prices,' and so their hesitancy to cut rates, I think, is actually quite a mark against them,' he said. Mr Warsh was considered a hawkish official to fight against inflation during his tenure at the Fed from 2006 to 2011, but he has shifted his position this year which has put him in line with Mr Trump's desire install a dove to lead the Fed. Scott Bessent Treasury Secretary Scott Bessent, who is leading the search committee, is also a reported contender. Mr Bessent has been at the centre of tariff negotiations with major trading partners including China. But Mr Trump could want Mr Bessent to remain at the Treasury Department. 'Because I like the job he's doing,' Mr Trump said on Tuesday. Christopher Waller Christopher Waller, who currently serves on the Federal Reserve Board of Governors, is considered to be a dark horse candidate to ascend to chair. Mr Waller is notably one of two recent Fed officials to have argued for a rate cut at the Fed's recent meeting – outliers from other voting members. He has also said that he expects Mr Trump's tariffs to lead to a one-time effect on inflation rather than being a more persistent increase in prices. Mr Waller, a Trump appointee, joined the Fed in 2020. His tenure as Fed governor runs through January 2030.
Yahoo
3 days ago
- Business
- Yahoo
The next Fed chair's dilemma: Maintain Fed independence while pleasing Trump
It is becoming clear what the major challenge will be for Jerome Powell's successor: Maintaining the Fed's independence while keeping President Trump happy. Even if the president doesn't remove Powell before his term is up in 10 months, he has made it clear that he wants the next Fed boss to do what he wants: Bring interest rates down. "I'm only interested in low-interest people," he said Wednesday, while denying reports that he intended to fire Powell yet leaving the door open to doing so for "fraud." The various candidates who are being considered by Trump have all expressed a support for lower rates, including National Economic Council Director Kevin Hassett, former Fed governor Kevin Warsh, Fed governor Christopher Waller and Treasury Secretary Scott Bessent. Trump "is putting somebody in place who he says he expects to cut interest rates very aggressively," StoneX senior adviser Jon Hilsenrath told Yahoo Finance. "Whoever becomes the next Fed chair is going to have some implicit promise to live up to.' Media reports this week suggested that Hassett is now rising as a leading candidate. He benefits from being close to Trump, having worked for the president during both of his terms, but whether Wall Street will view that as a shot to central bank independence remains an open question. 'Kevin has the qualifications to get the Fed job because he is close to the president,' Hilsenrath added. 'In terms of doing the Fed job well, I think it will be a real challenge.' Hassett told NBC Wednesday evening that "everybody at the White House understands the independence of the Fed is super important." When central banks lose their independence, Hassett said, 'it's bad for the economy and bad for markets.' Hassett did agree that rates should be lower than where they are right now, matching the easing cycles of other central banks around the world. And the fact that rates have not been lowered raises a "legitimate concern that independence of the Fed is not being respected by Fed members themselves." Another candidate for Powell's job, Warsh, told CNBC Thursday that 'history tells us that the independent operations in the conduct of monetary policy is essential.' 'But that doesn't mean the Fed is independent in everything else it does,' he added, while arguing that the Fed's reluctance to cut rates "is actually quite a mark against them." 'Fed independence is a myth' US history is full of examples where American presidents challenged Fed chairs, including a confrontation between President Johnson and Fed Chairman Bill Martin in the 1960s. President Nixon also leaned on former Fed Chair Authur Burns to bring rates down before the 1972 presidential election. Nixon's White House even leaked false stories about Burns seeking a pay raise as way of undermining his authority. 'What's currently unfolding before our eyes has been happening for decades behind closed doors,' wrote JPMorgan Chase's Ilan Benhamou said in a note Thursday that cited the Johnson-Martin clash. 'What's happening for everyone to see is definitely damaging for the institution, but let's be honest, the Fed independence is a myth,' Benhamou added. The pressure on Powell is not due to let up, with Trump and other White House officials continuing to raise questions about Powell's handling of a $2.5 billion renovation of the Fed's headquarters. White House budget director Russ Vought kept that pressure going Thursday, telling reporters that 'the Fed has been mismanaged for a number of years' and that Powell's request for the Fed inspector general to examine costs involved in the project is 'not enough.' "We want to have a sit down with those that are in charge of the project and get a brief from them and see where we're at." However, he denied that the administration's push for an investigation is a pretext for firing Powell. "We want to know why" the project has been so expensive,' he added. "It has implications for the country's fiscal situation." Some Republicans have said they are supportive of a Powell firing but others in the party that now controls Washington are starting to warn that any removal of Powell would in fact deal a blow to Fed independence. 'If anybody thinks it would be a good idea for the Fed to become another agency in the government subject to the president, they're making a huge mistake,' GOP North Carolina Sen. Thom Tillis said Wednesday. Majority Leader John Thune of South Dakota added on Fox News Wednesday night that 'I think the markets want an independent Federal Reserve. I think they want a central bank that isn't subject to the whims of politics.' Even Democratic Sen. Elizabeth Warren, a past critic of Powell, said Wednesday that 'markets will tank' if Trump fires Powell. 'When his initial attempts to bully Powell failed, Trump and Republicans in Congress suddenly decided to look into how much the Fed is spending on building renovations,' she added. 'Independence does not mean impunity and I have long pushed for more transparency and accountability at the Fed. But give me a break.' Click here for in-depth analysis of the latest stock market news and events moving stock prices Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
3 days ago
- Business
- Yahoo
The next Fed chair's dilemma: Maintain Fed independence while pleasing Trump
It is becoming clear what the major challenge will be for Jerome Powell's successor: Maintaining the Fed's independence while keeping President Trump happy. Even if the president doesn't remove Powell before his term is up in 10 months, he has made it clear that he wants the next Fed boss to do what he wants: Bring interest rates down. "I'm only interested in low-interest people," he said Wednesday, while denying reports that he intended to fire Powell yet leaving the door open to doing so for "fraud." The various candidates who are being considered by Trump have all expressed a support for lower rates, including National Economic Council Director Kevin Hassett, former Fed governor Kevin Warsh, Fed governor Christopher Waller and Treasury Secretary Scott Bessent. Trump "is putting somebody in place who he says he expects to cut interest rates very aggressively," StoneX senior adviser Jon Hilsenrath told Yahoo Finance. "Whoever becomes the next Fed chair is going to have some implicit promise to live up to.' Media reports this week suggested that Hassett is now rising as a leading candidate. He benefits from being close to Trump, having worked for the president during both of his terms, but whether Wall Street will view that as a shot to central bank independence remains an open question. 'Kevin has the qualifications to get the Fed job because he is close to the president,' Hilsenrath added. 'In terms of doing the Fed job well, I think it will be a real challenge.' Hassett told NBC Wednesday evening that "everybody at the White House understands the independence of the Fed is super important." When central banks lose their independence, Hassett said, 'it's bad for the economy and bad for markets.' Hassett did agree that rates should be lower than where they are right now, matching the easing cycles of other central banks around the world. And the fact that rates have not been lowered raises a "legitimate concern that independence of the Fed is not being respected by Fed members themselves." Another candidate for Powell's job, Warsh, told CNBC Thursday that 'history tells us that the independent operations in the conduct of monetary policy is essential.' 'But that doesn't mean the Fed is independent in everything else it does,' he added, while arguing that the Fed's reluctance to cut rates "is actually quite a mark against them." 'Fed independence is a myth' US history is full of examples where American presidents challenged Fed chairs, including a confrontation between President Johnson and Fed Chairman Bill Martin in the 1960s. President Nixon also leaned on former Fed Chair Authur Burns to bring rates down before the 1972 presidential election. Nixon's White House even leaked false stories about Burns seeking a pay raise as way of undermining his authority. 'What's currently unfolding before our eyes has been happening for decades behind closed doors,' wrote JPMorgan Chase's Ilan Benhamou said in a note Thursday that cited the Johnson-Martin clash. 'What's happening for everyone to see is definitely damaging for the institution, but let's be honest, the Fed independence is a myth,' Benhamou added. The pressure on Powell is not due to let up, with Trump and other White House officials continuing to raise questions about Powell's handling of a $2.5 billion renovation of the Fed's headquarters. 'It seems as though every single day now we have the White House beating up the Fed' and Powell 'in particular,' Yardeni Research president Ed Yardeni told Yahoo Finance. Some Republicans are supportive of a Powell firing but others in that party that now controls Washington are starting to warn that any removal of Powell would in fact deal a blow to Fed independence. 'If anybody thinks it would be a good idea for the Fed to become another agency in the government subject to the president, they're making a huge mistake,' GOP North Carolina Sen. Thom Tillis said Wednesday. Majority Leader John Thune of South Dakota added on Fox News Wednesday night that 'I think the markets want an independent Federal Reserve. I think they want a central bank that isn't subject to the whims of politics.' Even Democratic Sen. Elizabeth Warren, a past critic of Powell, said Wednesday that 'markets will tank' if Trump fires Powell. 'When his initial attempts to bully Powell failed, Trump and Republicans in Congress suddenly decided to look into how much the Fed is spending on building renovations,' she added. 'Independence does not mean impunity and I have long pushed for more transparency and accountability at the Fed. But give me a break.' Click here for in-depth analysis of the latest stock market news and events moving stock prices
