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Bank of America Chairman and CEO Brian Moynihan said last week that, as President Trump searches for a new chair of the Federal Reserve, maintaining the banking system’s independence is paramount.
The market “will punish people if we don’t have an independent Fed,” Moynihan said in a segment for “Face the Nation with Margaret Brennan” that was recorded on Dec. 17 and aired Sunday. “And everybody knows that.”
The Federal Reserve is the nation’s central bank and sets the interest rates. At the agency’s December meeting, it cut interest rates for the third consecutive time, reducing the federal funds rate — the rate at which banks charge each other for short-term loans — to between 3.5% and 3.75%.
Interest rates had dropped to nearly zero during the COVID-19 pandemic, but steadily began rising starting in 2022 to curb inflation. The December rate cut put the benchmark interest rates at their lowest level since Nov. 2022.
Throughout this year, Mr. Trump has repeatedly expressed his displeasure with Jerome Powell, the current Federal Reserve chairman, whose term is set to expire in May 2026. Although the Fed chair is nominated by the president and confirmed by the Senate, it is an independent agency and there is no legal precedent for Mr. Trump to fire the chair for anything but “for cause.” The Supreme Court found in 1935 that Congress is allowed to limit the grounds on which the president can fire members of independent federal boards.
In May, the high court did allow Mr. Trump to fire members of federal labor boards but it exempted the Federal Reserve, which it called a “uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States.”
Moynihan said on “Face the Nation” that Mr. Trump has “great candidates” for when Powell retires in May. But Moynihan warned that he felt there is “too much fascination with the Fed” right now.
“We’re a country that’s driven by the private sector, by what people do, and in the businesses and the companies, small companies and large companies, medium-sized companies, and entrepreneurs and doctors and lawyers — all these people drive our economy,” Moynihan said. “The idea that we are, like, hanging on the thread by the Fed moving rates 25 basis points, it seems to me we’ve gotten out of whack.”
Moynihan added that while he believed the Fed had a big role in “stabilizing the economy,” but “you shouldn’t know they exist, quite frankly.”
