Moore's choice of Trump for Fed raises bankers' concern

President Donald Trump's election of former campaign adviser Stephen Moore to sit on Federal Reserve board raises concerns of bankers who fear Conservative economist will undermine Fed's political independence .

Moore has not yet been officially named or even fully approved by the White House, but Trump's enthusiastic announcement that he would call the Heritage Foundation economist for the central bank surprised Washington and New York.

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Half a dozen bank representatives interviewed on Tuesday in private said they were not planning to take a stand on the candidacy, but that their reservations might appear in conversations with Republican senators, which could complicate the process of Moore's confirmation against the strong opposition of the Democrats. .

"Bankers are very committed to the Fed and its institutions are institutionally committed," said Karen Petrou, managing partner at Federal Financial Analytics. "They disagree individually and sometimes collectively with what that does, but I do not think there's a significant dispute between the smaller and the larger banks as to the need for an independent Fed." . "

Moore has the backing of some Republican senators, but most members of the Banking Committee GOP have not yet taken a position at this stage, including President Mike Crapo (R-Idaho), whose support is crucial.

For his part, Moore has fended off the fear that he will bow to Trump's will with the central bank.

"I will be independent," he told POLITICO during a phone interview Tuesday night, though he admitted, "I'm a big fan of Donald Trump."

But he also has differences of opinion with the president, citing trade and antitrust issues.

Yet Moore, who would occupy one of the two vacant seats on the Fed's board of directors, has already questioned the need for the institution's independence vis-à-vis short-term political considerations, a key element in the design of the central bank to help it. make decisions that are in the long-term interest of the economy.

He has also been criticized for his qualifications by economists from all walks of life.

This is a radical departure from Trump's other central bank candidates, who have been widely respected and habitual, including President Jerome Powell, a frequent target of his president because of the Fed's rate hike campaign. 'last year.

Bankers' hesitation about Moore is also striking, as he is likely to be a reliable spokesman for deregulation.

"The Fed was seen as an immune entity against the fate of other departments where political considerations outweighed qualifications when it came to appointments," said Tim Duy, professor at the University of Oregon in a recent editorial. "This is no longer the case."

Moore was a fierce proponent of the president on television, channeling it into accusing central bank officials of "committing economic malpractice" by raising rates in December – a decision that would have prompted Trump to consider dismiss Powell.

"Who is the Fed sensitive to, if not the president?" Moore told CNN this month.

He has repressed this sentiment since his appointment, saying he would not consider political considerations. "I understand that the Fed must be independent of what the President wants," he said in Washington last weekend.

He also promised to work with his Fed colleagues, if confirmed, in an interview with Bloomberg TV.

"I do not want to be a disrupter," he said. "I want to be someone who can really help President Powell and other members of this board put in place the best stable, growth-friendly pricing system we can for this country."

The central bankers have a 14-year term and Senator Richard Shelby (R-Ala.) Expressed confidence that this alone would be enough to ensure that the President's candidates would not be indebted to him.

"Whoever goes will be independent, because once you're in the long run at the Fed, you're independent," Shelby told reporters Monday night.

Moore is also just one of six Fed governors, which means he can not change the outcome of a vote on his own. "It will be a dissident, which the Fed would prefer to avoid, but with which it can live," said Ian Katz, director of Capital Alpha Partners, in a note to customers. "His impact on politics will likely be limited as governor."

But Katz also noted that if Trump were re-elected, he could then nominate Moore as president when Powell's term expires in 2022.

POLITICO has been meeting with most Republicans on the Senate Banking Committee, many of whom have praised Moore's intelligence and conservative skills, and Sen. David Perdue (R-Ga.) Announced his intention to support the candidate.

The others refused to take a firm stance, although Moore was complimented by Sens. Shelby, Mike Rounds (RS.D.), Kevin Cramer (RN.D.) and Pat Toomey (R-Pa.), Who called him "a good guy."

Crapo declined to say he would support Moore but said it was "a priority to fill all board seats".

On the issue of independence, Cramer said it was perfectly natural for the president to appoint a person with whom he is familiar.

"Of course [Fed officials] are and must be independent, but they are appointed by people who know them, and that's an asset, not a conflict in my opinion, "said Cramer. "Stephen is a guy with great integrity and intellectual ability. … I do not think he would be influenced politically. "