(Bloomberg) -- President Donald Trump concluded a White House meeting Thursday afternoon with Federal Reserve Chair Janet Yellen as House conservatives mounted a campaign to persuade him not to reappoint her.
Trump met with Yellen as nears completing his search for the next leader of the U.S. central bank when her term ends in February. A White House official confirmed at mid-afternoon that their meeting had concluded.
Representative Warren Davidson, an Ohio Republican and member of the conservative House Freedom Caucus, is circulating a letter for colleagues on the House Financial Services Committee to sign against Yellen’s re-appointment, he said.
“I’m not sure we can make the Fed great again, but we can make it better than it has been,” Davidson said. “Janet Yellen would not be a great successor to Janet Yellen.”
Davidson cited Yellen’s approach to regulatory enforcement as key to his opposition. “The way she’s applied the regulatory framework outside of monetary policy is one of my main concerns,” Davidson said, adding that strict stances on some rules has “led to slower economic growth.”
House Republicans have been among of the biggest critics of the Federal Reserve since the financial crisis, passing several pieces of legislation aimed at constraining the central bank, including requiring it to follow a policy rule and subjecting it to government oversight if there were deviations. Yellen reached out to lawmakers at the start of her term in 2014 but her relationship with conservatives has remained tense.
The House of Representatives has no direct power to block the Fed chair, who is nominated by the president and confirmed by the U.S. Senate.
Insider or Outsider
Some conservatives also have concerns about Jerome Powell, a member of the Fed board of governors appointed by former President Barack Obama who is also on Trump’s shortlist for chairman.
Trump said at a news conference on Tuesday that he’ll make a decision on Fed chair soon, and that he’s considering among a shortlist of five candidate. They include Stanford University economist John Taylor, former Fed governor Kevin Warsh and his own chief economic adviser, Gary Cohn, in addition to Yellen and Powell.
“Janet Yellen and Jerome Powell both represent a continuation of a failed, status quo monetary policy that puts the interests of the big banks ahead of the American people,” said Andrew Surabian, a former special assistant to Trump who now works closely with the president’s former chief strategist, Steve Bannon. “Americans deserve a true outsider at the Fed and not another insider in the pocket of the financial elites.”
Surabian is a senior adviser to Great America Alliance, a nonprofit offshoot of a SuperPAC affiliated with Bannon.
Davidson named Taylor and Warsh as his top choices but said he’d be fine with Cohn or Powell as well. “The point is that we have an opportunity to do better than Janet Yellen,” he said.
Fed spokeswoman Michelle Smith declined to comment.
Yellen’s Argument
Bannon has put his focus on electing anti-establishment conservatives in 2018 and the Freedom Caucus is not expected to endorse a candidate Fed chair. But their interest in Yellen is a signal of the pressure Trump is under from his base of support. Additionally, many of Trump’s closest aides and advisers are recommending he choose someone other than Yellen, who was nominated by former President Barack Obama and took office in 2014.
Yellen has overseen a delicate transition in U.S. monetary policy. She ended quantitative easing, raised the benchmark lending rate off zero, and has now started to unwind the central bank’s $4.5 trillion balance sheet with little impact on the economy or financial markets.
She has not presided over a recession, unlike her three predecessors. Unemployment has declined on her watch to 4.2 percent from 6.7 percent, while inflation is low at 1.4 percent. U.S. stock have hit record highs -- a favorite observation by the president -- and interest rates remain unusually low in an expansion now in its ninth year. Her term ends in February.
