As Trump Continues to Pressure Powell, Wall Street Leaders Say "Fed Independence Must Be Protected"

Goldman, Citi, BoA, and JPMorgan CEOs Speak with One Voice

As tensions escalate between U.S. President Donald Trump and Federal Reserve Chair Jerome Powell, the heads of major American banks are publicly voicing their support for the Fed and emphasizing the importance of central bank independence.

According to the Wall Street Journal (WSJ) on July 16 (local time), David Solomon, CEO of Goldman Sachs, stated in an interview with CNBC that day, "I believe that the independence of central banks has been enormously beneficial to us, not only in the U.S. but globally." He added, "The independence of central banks, and specifically the Fed, is extremely important, and we must fight to protect it."

Exterior of the U.S. Federal Reserve. Photo by Reuters Yonhap News

CEO Solomon further stressed that the independence of the Fed, especially in matters of monetary policy, is of utmost importance.

Jane Fraser, CEO of Citigroup, issued a statement saying, "The Fed's independence determines its credibility," and added, "It is essential to the efficiency of capital markets and to America's competitiveness."

Brian Moynihan, CEO of Bank of America (BoA), said in an interview with Bloomberg TV that day, "The Fed is an independent institution and should be outside the authority of the executive branch and Congress." He continued, "The Fed receives instructions, is monitored, and is reviewed. However, it was fundamentally established to maintain its independence."

The previous day, Jamie Dimon, Chairman of JPMorgan Chase, said during a virtual press conference following the release of the bank's second-quarter earnings, "The independence of central banks is absolutely critical." He warned, "Interfering with the Fed can backfire and may result in outcomes that are the exact opposite of what was intended."

The fact that these leaders, who had previously been reluctant to directly criticize President Trump, are now openly supporting the Fed's independence is due to President Trump's continued pressure on Chair Powell to resign and to cut interest rates.

In an interview published that day with the news site 'Real America's Voice,' President Trump said he would welcome Powell's resignation but expressed concern that firing him could cause turmoil in the markets. When asked by reporters during a meeting with the Prime Minister of Bahrain whether he was considering dismissing Powell, Trump replied, "I rule nothing out," but added, "However, unless he has to step down due to fraud related to the renovation of the Fed building, I think the likelihood (of dismissal) is very low."

The WSJ pointed out that Wall Street fears political pressure on the Fed could undermine its independence and negatively impact global capital flows, as it could weaken U.S. Treasury bonds and the dollar, which are the foundation of global financial markets.