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Tags: david stockman | trump | fed | jerome powell | janet yellen

David Stockman: Trump Fed Pick Jerome Powell Is 'Janet Yellen With a Tie'

(Caryl Englander)

By    |   Monday, 06 November 2017 09:08 AM

Former Reagan Budget Director David Stockman says President Donald Trump’s pick of Federal Reserve governor Jerome Powell as Fed Chair is a “horrible choice.”

“He’s Janet Yellen with a tie,” Stockman told Fox Business Network.

He’s a crony capitalist Keynesian who thinks you should run the economy from the twelve people sitting on the Federal Open Market Committee,” he said.

Trump, a Republican who seeks to pare down the central bank’s tough financial regulations while keeping rates moderately low, on Thursday named Powell as successor to Janet Yellen when her term ends in February. This decision broke a precedent of Fed chairs serving at least two terms.

Many believe that Powell fits Trump’s economic agenda because he is expected to help ease banking regulations, Fox explained.

Other respected economic voices agree with Stockman.

 “I think though that he is soft on regulation and that pleases the market, but it doesn’t please me necessarily, and in addition I think he lacks the proper appreciation for our credit-based financial system,” Janus Henderson Portfolio Manager Bill Gross  told Fox Business Network's "The Intelligence Report."

Powell worked at the private equity firm Carlyle Group in 1997, before being appointed as a member of the Fed’s board of governors in 2012 by former President Barack Obama. Fox reported.

Gross believes that Powell’s previous experience working in private equity will work against him when running the Fed.

“I really don’t think as an investor in private equity that he had a sense of credit creation, credit destruction [and] the shadow banking system. I think many of his speeches have been devoid of some of that intellectual discussion, and I think it’s important going forward should we see the potential for another Lehman moment that we have a Fed chairman that knows what’s going on. I’m not so sure at the moment that he does,” he said.

Instead of Powell, Gross offered his own picks.

 “I would have preferred perhaps Paul McCulley from Pimco who forecasted the debacle and talked about the Minsky Moment. Otherwise I would have preferred Neel Kashkari, who’s a legitimate Fed governor and has displayed some pretty instructive ideas going forward,” he said.

However, Gross would have been fine with keeping Janet Yellen.

“I’m not perfectly content with her, but she’s done a decent job. She’s a little model oriented or too model oriented, and I think you need to be more subjective these days in terms of structural ideas that can’t necessarily be modeled like Janet Yellen and others have done at the Fed,” he said.

The White House has an unusually large window to reshape the Fed given three more seats are vacant on its powerful Board of Governors, and four if Yellen retires next year, Reuters reported.

The Fed’s well respected vice chair, Stanley Fischer, and its point-person on bank supervision, Daniel Tarullo, stepped down earlier this year as the overhaul gained steam in the wake of the 2016 U.S. election.

“It clears the deck for a Powell-led Fed,” said Peter Hooper, chief economist at Deutsche Bank Securities. The New York Fed president’s “bully pulpit is an important one” on both monetary and regulatory policy, he said.

(Newsmax wire services contributed to this report).

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StreetTalk
Former Reagan Budget Director David Stockman says President Donald Trump’s pick of Federal Reserve governor Jerome Powell as Fed Chair is a “horrible choice.”
david stockman, trump, fed, jerome powell, janet yellen
534
2017-08-06
Monday, 06 November 2017 09:08 AM
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