02:26 - Source: CNN
Trump and the Fed: Rewriting the script

Story highlights

Trump could unveil his choice as soon as this week, sources say

The President has narrowed his list of potential picks

Washington CNN  — 

With a decision imminent, President Donald Trump is narrowing his options to head the Federal Reserve, deciding among candidates who represent widely divergent views on the US economy.

Trump could unveil his choice for one of the most powerful postings in the world as soon as this week, people familiar with the process say. The President himself has teased an impending announcement in remarks over the past several days.

Still on the shortlist is current chairwoman Janet Yellen, a Democrat who met with Trump in the Oval Office last week, whom sources say has won over the President after his harsh criticisms of her on the campaign trail last year.

Also in the mix are two Republicans – current Fed governor Jerome Powell and Stanford economist John Taylor – who have each expressed differing approaches to monetary policy, offering Trump a sharply defined choice for who to lead the Fed during a period of healthy economic growth and a stock market reaching record highs.

Ultimate decision

The decision has assumed all the hallmarks of a Trump personnel announcement – dramatically different finalists vying ahead of a heavily teased reveal – that mimics the finales of Trump’s reality series “The Apprentice.”

Over plates of meatloaf and cherry pie during Senate Republicans’ weekly policy lunch, Trump conducted an informal poll of lawmakers about potential picks for Fed chairman.

“He did sort of survey the group,” said Sen. John Cornyn, R-Texas, adding some senators raised their hands in support of the various names being considered. He declined to elaborate on which candidate received the most support among the lawmakers, but a person familiar with the session said Taylor appeared to be the most popular.

Since he was elected nearly a year ago, Trump has faced the ultimate decision of whether to re-nominate Yellen or select his own pick to head the Fed. As of Monday, he was still weighing that choice, cognizant of how much a Fed chairman could affect the rebounding economy he so frequently trumpets.

“Very, very close” is how Trump described his Fed decision-making in the Oval Office on Monday before meeting with Singapore’s prime minister.

The White House declined to speculate on timing for the decision, and said Trump remains open to all of the candidates that he’s interviewed for the job.

Since late last month, Trump has been meeting with candidates for the job after his advisers encouraged a sped-up timeline for selecting a Fed nominee. The President had initially indicated over the summer he would make a pick by the end of the year, but aides, including Treasury Secretary Steve Mnuchin, pushed for a faster process that would allow the Senate to consider a nominee before Yellen’s term expires at the end of January.

Throughout the process, Trump has been focused largely on individual candidates’ stances on monetary policy – including on the Fed’s current policy of slowly raising the benchmark interest rate – and their approach to financial regulation, which he believes has impeded financial growth.

Advisers close to the process say Trump has appeared more comfortable in his Fed search than on other areas of policy-making, where he had little experience before becoming president. Like his current effort on tax reform, Trump has long-held views on the Fed policy going back decades.


Trump met with Kevin Warsh, a veteran central banker and close adviser to powerful investors, on September 26, and the Wall Street insider rose to the top of informal shortlists for the posting because of his deep relationships in Washington – including to Trump, who is close friends with Warsh’s father-in-law, Ronald Lauder.

Lauder, a billionaire businessman who is an heir to a cosmetics fortune, lobbied the President on Warsh’s behalf, according to people familiar with the process. And Trump appeared receptive, impressed by Warsh’s experience as a Fed governor during the 2008 financial crisis and his administration-aligned views on loosening some regulations.

But in the weeks since that interview, Trump has held sessions with additional candidates that gained the backing of key members of his selection committee. And questions about Warsh’s qualifications – he isn’t an economist by training – emerged among some aides.

Powell, who has served as a Fed governor since 2012, is largely supportive of Yellen’s approach to slowing raising interest rates as the economy improves. He’s been backed by Mnuchin, who has orchestrated Trump’s Fed search, and is widely viewed by analysts as a consensus pick for the chairman post. He spoke with Trump on September 27.

Taylor, meanwhile, has been a critic of the Fed’s actions, and devised a mathematical formula that would have raised the benchmark rate faster over the past several years. Vice President Mike Pence has advocated for Taylor, and people familiar with Trump’s Oval Office interview with the economist on October 12 say the President was impressed.

After Trump’s meeting with Yellen on October 19, he indicated he was still considering re-nominating her for a second term, which would be in keeping with a tradition of US presidents keeping their predecessor’s Fed chair in the job.

“I’ve been seeing a number of people and most people are saying it’s down to two, Mr. Taylor, Mr. Powell. I also met with Janet Yellen, who I like a lot. I really like her a lot. So I have three people that I’m looking at,” he told Fox Business’ Maria Bartiromo in a recent interview.

He also raised the possibility of nominating one of his selections to the chairman position, and another to the vice chairman post, which became vacant after Stanley Fischer stepped down for family reasons this month. Trump’s advisers have advocated such a move to forgo another search process.

By the wayside, for now, is Gary Cohn, Trump’s top White House economist who was considered all but certain to be nominated for the job over the summer. Since then, Cohn angered the President by speaking out against Trump’s response to white nationalist violence in Charlottesville, Virginia, a move the President considered disloyal. Cohn returned to Trump’s good graces since then, but is not among the candidates considered finalists for the job.

Trump’s insistence upon loyalty among his aides will be tested by whoever he selects as Fed chairman. Despite its ability to profoundly impact the US economy, the position operates independently of the White House, meaning the person Trump chooses will not be beholden to the President’s own views.

CNN’s Manu Raju contributed to this report.