- Treasury Secretary Scott Bessent called Powell’s decision to stay on the Fed board “a violation of all Federal Reserve norms” and said it was “highly unusual” for someone who bills himself as an institutionalist.
- Bessent called the move an “insult” to incoming chair Kevin Warsh and Trump-appointed governors Michelle Bowman and Christopher Waller — implying Powell alone can’t safeguard the Fed’s integrity.
- Powell said he’s staying to defend the Fed against “a series of legal attacks” and will leave once a DOJ building-renovation probe is “truly over.”
- The standoff adds another layer of political tension to the Fed transition, with the Supreme Court still considering whether Trump can legally remove a sitting Fed governor.
What Happened?
Treasury Secretary Scott Bessent publicly lit into Jerome Powell on Wednesday after the outgoing Fed chair announced he would remain on the Federal Reserve’s Board of Governors after handing the chairmanship to Kevin Warsh next month. Speaking on Fox Business, Bessent called the move “a violation of all Federal Reserve norms” and pointedly noted the hypocrisy of an avowed institutionalist breaking a 75-year tradition. He went further, calling it an “insult” to Warsh and Trump-appointed governors Michelle Bowman and Christopher Waller — who Powell implicitly suggested couldn’t be trusted to preserve the Fed’s independence on their own. Powell, for his part, said he felt compelled to stay given the “series of legal attacks on the Fed” and indicated he’ll depart once the DOJ probe into a Fed building renovation project is “truly over.”
Why It Matters?
Bessent’s sharp public rebuke underscores how deeply the Powell-Trump relationship has deteriorated — and how the Fed’s transition is now playing out as a political spectacle rather than a routine handover. Powell’s decision to stay denies the administration a governance vacancy it had been counting on to consolidate influence over the seven-member board. By framing his decision as institutional self-defense against legal attacks, Powell is casting Warsh’s incoming leadership as potentially compromised — a framing the White House finds infuriating. Bessent’s counterattack, calling it an insult to Trump’s own nominees, is an attempt to flip that narrative: the administration’s picks are trustworthy; it’s Powell who is the norm-breaker.
What’s Next?
With Warsh’s Senate Banking Committee vote cleared on a party-line basis — the first ever for a Fed chair nominee — his full Senate confirmation vote is next. Powell will then remain on the board for an unspecified period, with his presence creating a unique dynamic where the former chair can participate in discussions, cast votes, and potentially publicly dissent from Warsh’s direction. The Supreme Court case over whether Trump can remove a sitting Fed governor remains unresolved — its outcome could determine whether the White House has any legal lever to force Powell’s exit before he chooses to leave.
Source: Bloomberg
