President's Discontent with Fed Chair
Scott Bessent stated that Donald Trump consistently brings up the Federal Reserve with him on a daily basis. The president has unequivocally expressed his disapproval of Jerome Powell, both personally and in his capacity as the leader of the world's most influential central bank, since prior to his election victory.
“He’s frequently expressed his disappointment with Chair Powell,” Scott Bessent shared during his appearance on Kudlow.
Criminal Investigation into Jerome Powell
Currently, Jerome Powell is under a criminal investigation. The Department of Justice is examining allegations of whether he misled Congress regarding the extensive renovation project underway at the Federal Reserve's headquarters in Washington.
Scott Bessent offered no defense for Powell's actions. “I don’t know anything about construction, seemingly not many people at the Fed do,” he commented, providing a brief and direct assessment.
Calls for Overhaul Amidst Powell Investigation
The Treasury Secretary acknowledged a lack of detailed information about the ongoing case but used the situation to criticize the Federal Reserve's operational practices.
He asserted that the institution “needs a lot of work” and emphasized this point. “It does need a thorough overhaul,” he told Larry Kudlow. Scott Bessent highlighted that the Federal Reserve's decisions impact every American, yet there is a perceived absence of “accountability” within the organization.
He suggested that the current scandal might accelerate his long-standing advocacy for an internal review. “I’ve been calling for an internal investigation or an internal review of all this, so perhaps this will push that idea along,” Scott Bessent remarked. This situation has evolved beyond mere construction issues into a significant dispute over the control of monetary policy.
Jerome Powell released his own statement on the matter. “This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions, or whether instead monetary policy will be directed by political pressure or intimidation,” he stated in a video message. However, this did not quell the intense criticism.
Donald Trump, a vocal critic of Powell, has previously indicated his willingness to dismiss him. He has accused Powell of engaging in political maneuvering, despite the Federal Reserve Chair position being intended as nonpartisan. The current situation presents a more serious challenge, as a criminal charge could result in Powell's permanent removal.
Potential Successors and Decision Timeline
Scott Bessent was also questioned about potential replacements for Powell. He confirmed that the final round of interviews has concluded. However, President Trump has not disclosed his preferences to him.
“President Trump hasn’t shared his thoughts with me,” Scott Bessent stated. “What I can tell you is he’s been very deliberate. He has asked exactly the questions that I think you and I and the markets would want to ask.”
Kevin Hassett had been considered a leading candidate to succeed Powell. However, President Trump made it clear that Hassett would not be appointed to the role. “I actually want to keep you where you are, if you want to know the truth,” Trump told Hassett directly at the White House, effectively ending Hassett's prospects for the position.
Scott Bessent confirmed this development. “If that’s the president’s prerogative, then so be it,” he said. Regarding who will ultimately be chosen, the decision remains uncertain. “Only the president knows. … It’s his prerogative. He has been thinking about this almost since day one of Trump 2.0,” Scott Bessent commented.
The announcement of the decision is anticipated in January. Scott Bessent indicated that he expects it to occur “either before he leaves for Davos or when he returns.”