Powell board tenure after May raises stakes for Fed independence fight

If Powell stays on the board after his chairmanship ends, Trump would hold only three of seven appointments to the Fed’s governing body — short of a majority. If Powell departs, Trump could potentially gain majority control and, through a sympathetic chair, press for the aggressive interest-rate cuts he has publicly demanded.

A Justice Department investigation into Federal Reserve Chair Jerome Powell has focused attention on a question with broad implications for U.S. monetary policy: whether Powell will remain on the Fed’s board of governors after his chairmanship ends May 15, or step down as nearly all of his predecessors have done.

Powell’s choice will determine whether President Trump can achieve majority control of the central bank, potentially reshaping an institution that has operated largely insulated from day-to-day presidential politics for decades.

If Powell stays on the board, Trump would hold only three of the seven appointments to the Fed’s governing body — short of a majority. If Powell departs, Trump could gain majority control and, through a sympathetic chair, press for the aggressive interest-rate cuts he has publicly demanded.

The board-seat calculation

Powell, 72, was appointed Fed chair by Trump in 2018. His second four-year term as chair ends May 15. But the Fed’s structure gives him a separate term as a board governor that runs until January 31, 2028.

Nearly all Fed chairs have left the board of governors when their chairmanship ended. Powell could be the first in nearly 50 years to stay on.

Many Fed-watchers believe the Justice Department investigation — centered on Powell’s June testimony before Congress about $2.5 billion in cost overruns for Fed building renovations — was intended to pressure him into stepping down.

David Wilcox, a former top economist at the Fed and senior fellow at the Peterson Institute for International Economics, said he does not expect that pressure to succeed.

“I find it very difficult to see Powell leaving before midnight on Jan. 31, 2028,” Wilcox said. “This is a mortal threat to the governance structure of the Fed as we’ve known it for 90 years. And I think that Powell does take that threat exceedingly seriously, and therefore will believe that it is his solemn duty to continue to occupy his seat on the board of governors.”

Powell has declined to comment on his plans beyond May 15. A spokesperson for the Fed declined to comment.

If Powell stays

Should Powell remain on the board, Trump’s three appointments — two from his first term plus a new chair — would fall short of the majority needed to direct the institution. Even with a chair aligned with Trump’s rate-cut agenda, that chair “would have very little persuasive power with his colleagues,” according to Wilcox, who is also director of research at Bloomberg Economics.

Powell and other members of the Fed’s 19-member interest-rate-setting committee could outvote a new chair. The last time that occurred was 1986.

If Powell leaves

If Powell departs, Trump could nominate a fourth board member and potentially reach a majority. He could add a fifth if the Supreme Court allows his effort to remove Governor Lisa Cook to proceed; the court is scheduled to hear that case this week.

A majority would give the White House substantial leverage over the institution. Treasury Secretary Scott Bessent has advocated reforms to reduce the Fed’s influence in the economy and financial markets.

Several presidents of the 12 regional Federal Reserve banks have also resisted the deep rate cuts Trump has demanded. The board of governors could seek their removal if a sympathetic chair wished to pursue it.

Senate roadblock

Trump said Tuesday he hopes to name a new Fed chair in the next few weeks. That timeline faces complications.

U.S. attorney for the District of Columbia Jeanine Pirro sent subpoenas to the Fed regarding Powell’s testimony. Several Republican senators — including at least two on the Banking Committee — have expressed skepticism that Powell committed crimes.

Sen. Thom Tillis, a North Carolina Republican, said he would not vote for any Fed nominees until the legal cloud around Powell is resolved, a position that would be sufficient to stall a nomination in committee.

If no new chair is confirmed by May 15, Powell could remain in the chair post until a replacement is seated.

Trump has repeatedly attacked Powell for declining to cut interest rates as sharply as the president has sought. On Tuesday he noted that mortgage rates have declined in the past year.

“If I had the help of the Fed, it would be easier,” Trump said. “But that jerk will be gone soon.”

A historical precedent — and a warning

Some precedent exists for Powell’s path. In 1978, then-Chair Arthur Burns remained on the board for about three weeks after his chairmanship ended. More consequentially, in 1948, then-Chair Marriner Eccles stayed on as a governor for three years at President Harry Truman’s request. In 1951, Eccles played a central role in a dispute over interest rates that produced the Fed-Treasury Accord, which established the framework of Fed independence that has governed the institution since. The principal Fed office building currently under renovation — at the center of the criminal inquiry into Powell — is named after Eccles.

Truman then appointed a Treasury official, William McChesney Martin, as Fed chair, expecting compliance. Martin raised interest rates instead. Years later, Truman ran into Martin in New York City and called him a “traitor.”

Lev Menand, a law professor at Columbia University who studies the Fed, said the episode carries a lesson for the present moment.

“So it’s a cautionary tale also for Trump, thinking he’s going to get his own Fed chair in there,” Menand said. “Martin didn’t do what Truman wanted.”