Wall Street CEOs Stress Fed Independence Amid Powell Attacks

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(Bloomberg) -- Top bosses at some of Wall Street’s biggest banks emphasized the importance of an independent Federal Reserve as the long-running saga between President Donald Trump and central bank Chair Jerome Powell intensified.

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Bank of America Corp.’s Chief Executive Officer Brian Moynihan and Goldman Sachs Group Inc.’s David Solomon joined JPMorgan Chase & Co.’s CEO Jamie Dimon in stressing the importance of the Fed’s autonomy. Moynihan said in an interview with Bloomberg TV on Wednesday that the Fed was “set up to be independent.”

Jane Fraser, who runs Citigroup Inc., said in a statement that “the independence of the Federal Reserve drives its credibility. It is critical to the effectiveness of our capital markets and US competitiveness.”

Trump has repeatedly assailed Powell for holding off on cutting rates, with administration officials confirming in recent days that a process to select a successor — Powell’s term as chair isn’t set to expire until May 2026 — is underway. Analysts have warned that if Trump were to oust Powell it would roil financial markets and lead to a serious legal showdown over the central bank’s independence.

Trump denied on Wednesday that he’s seeking to remove Powell, after a White House official had said that such a move was discussed in a meeting with congressional Republicans on Tuesday night. Trump again attacked Powell on Wednesday, labeling him a “knucklehead” who has been “too late” to lower rates.

Dimon said on Tuesday that the Fed’s continued independence is “absolutely critical.” That doesn’t just mean under Powell, whom Dimon said he respects, but also for whomever eventually succeeds him. Meddling with the Fed “can often have adverse consequences,” the CEO said during his bank’s second-quarter earnings call.

Goldman Sachs’ CEO Solomon said in an interview on CNBC that Fed independence, particularly when it comes to monetary policy, is “super important.”

“I think central bank independence, not just here in the United States but around the world, has served us incredibly well,” he said Wednesday. It’s something “we should fight to preserve,” he added.

Bank of America’s Moynihan said it’s also a president’s right to appoint the next Fed successor through Congress. And any successor will have to navigate the rates question, he said.

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“The Fed is an independent agency, and they are meant to be outside the purview of the executive, and Congress,” he said on Bloomberg TV. “They are called to task, and monitored, and reviewed. The reality is they were set up to be independent.”

--With assistance from Jamie Tarabay and David Westin.

(Updates with CEO statement in third paragraph.)