Federal Reserve Chairman Jerome Powell told a House panel Wednesday that he would not resign if President Donald Trump ordered him to step down.
Powell, who has been excoriated by Trump on Twitter for his management of the Fed and the nation’s monetary policy, told House Financial Services members he would serve out his term. He made his comments during his semi-annual testimony to the committee.
The Fed chairman also said he shared concerns among lawmakers about Facebook Inc.’s proposal to launch a cryptocurrency.
Committee Chairwoman Maxine Waters opened the hearing by “addressing the current elephant in the room when it comes to monetary policy and the Fed.”
“This president has made it clear that he has no understanding or respect for the independence of the Federal Reserve,” said Waters, D-Calif. “Let’s be clear: It is essential that the Federal Reserve maintain its independence from the executive branch.”
Waters asked Powell what he would do if the president ordered him to step down.
“Of course, I would not do that,” said Powell, forgetting to turn on his microphone first.
“I can’t hear you,” Waters replied, drawing laughs.
Microphone on, Powell reiterated his stance: “My answer would be no,” he said. “The law clearly gives me a four-year term and I fully intend to serve.”
The Fed has raised the benchmark interest rate nine times since 2015, up to a range of 2.25 to 2.5 percent in December. Since then, it has held off on further rate hikes, and many analysts now forecast a rate cut in the coming months. Inflation remains below the Fed’s target of 2 percent, while leading indicators, like bond yields and slowing business investment, are raising worries of an imminent economic downturn.
Despite Trump’s grumblings, the economy has continued to expand. The Bureau of Labor Statistics reported Friday that 224,000 nonfarm payroll jobs were added in June and that the unemployment rate was 3.7 percent.
Waters reiterated her concern with Libra, the cryptocurrency that Facebook wants to create along with 27 other companies.
Congress responded with bipartisan trepidation to Facebook’s announcement in June that it was partnering with the companies to create Libra, a cryptocurrency and payments system.
The Senate Banking Committee scheduled a hearing on July 16, and the House Financial Services Committee plans to hold its own the following day.
“I believe what they are planning raises serious privacy, trading, national security and monetary policy concerns for consumers, investors, the U.S. economy and the global economy,” Waters said Wednesday. “Facebook’s foray into this field should signal to all of us that our current system of regulation lacks adequate coordination and safeguards with regard to cryptocurrency.”
Powell echoed those concerns.
“While the project sponsors hold out the possibility of public benefits, including improved financial access for consumers, Libra raises many serious concerns regarding privacy, money laundering, consumer protection and financial stability,” Powell said. “These are concerns that should be thoroughly and publicly addressed.”
Powell noted that Facebook met with the Fed a few months before Libra’s public announcement, and said that the central bank created a working group with Treasury Department officials to coordinate regulatory responses. Powell also said the Fed was working with other central banks.
The Libra qualms were evident on both sides of the aisle.
In response to a question from ranking member Patrick T. McHenry, R-N.C., Powell explained how Libra could present a systemic risk to the financial system’s stability.
“Facebook has a couple billion-plus users,” Powell said. “You have, for the first time, the possibility of a very broad [cryptocurrency] adoption, and if there were problems there associated with money laundering, terror financing, [or] all of the things we’re focused on — including the company — they would immediately arise to systemically important levels due to the size of the network.”
Rep. Steve Stivers, R-Ohio, asked Powell what he would tell Facebook if the company couldn’t sufficiently address anti-money laundering concerns.
“I don’t think that the project could go forward,” Powell said, reiterating that the company would also need to satisfy worries over data privacy, consumer protection and other issues. “All of those things will need to be addressed very thoroughly and carefully and, again, in a deliberate process that won’t be a sprint to implementation.”