David Rubenstein gives his take on Trump's threats to fire Powell

Yahoo

4 days ago

President Trump has made no secret of his anger toward the Federal Reserve and its decision not to cut rates. Trump says he is not planning on firing Fed Chair Jerome Powell, but he has left the door open to ousting him. The Carlyle Group co-founder and co-chairman David Rubenstein weighs in on the turmoil, explaining why he thinks Powell has "done a very good job."
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All right, for today's Power Player, I got a chance to speak with David Rubenstein, co-founder and co-chairman of global investment firm Carlyle about the ongoing saga around President Trump's dissatisfaction with Fed chair J. Powell. Trump telling reporters in the Oval Office Wednesday that he doesn't plan to fire Powell after Bloomberg and CBS reports said the chairman was on the chopping block. Here's what David Rubenstein told me about the situation.
Well, President, uh, Trump just as you said, walked back that statement. So, what I just said before we went on the air, so before he went on the air is that he said he's not planning to fire Powell. As you probably know, J. Powell worked at Carlyle, and in effect for me for eight years. I hired him out of the George Herbert Walker Bush Administration, a very smart man. And you know, I recognized not everybody, uh, says he's done a perfect job, but I think he's done a very good job because he tells you what he's going to do or the Fed's likely to do before they do it, which is unusual for a lot of Fed chairs. And after it's done within 30 minutes, he will explain it exhausting detail what they did and why they did it. And I think that's helpful. You may remember in the days of, uh, William McChesney Martin or or Paul Volcker, they would do what they wanted to do and you had to guess what they did and why they did it. Now it's much more transparent. I think Jay's done a good job in that. Secondly, we haven't had a recession since J. Powell's been chairman of the Fed. Now, you know, recessions occur in the United States roughly every seven years or so, and obviously the Fed chairman is not the only person responsible for their being or not being a a recession. But I think we haven't had one because I think he managed the inflation reasonably well. Remember inflation went to 8%. And it went to 8% because um, the Bush administration or the, I'm sorry, the Trump administration and the Biden administration both both uh put a lot of money into the economy to keep us during the Covid period of time from going into recession. So we injected about five trillion dollars into the economy without corresponding tax increases. The result was some inflation. Now, some people made a mistake initially by saying it was transitory, and I think J. Powell would recognize that it wasn't transitory. But once they recognized it wasn't transitory, they began rate increases that I think dealt with the inflation problems brought it down now. Not quite where they want it to be, but lower than it had been. I think the most recent number showed about a 2.7% increase the last month, but uh, the Fed's target is 2%, so they got a way to go.
David, how important is it that um, Jerome Powell finishes out this term? In terms of importance to the Federal Reserve as an institution and as the major player in markets.
Well remember, the Federal Reserve has two jobs. It was set up originally to take care of inflation, make sure the currency was strong, and in the 1970s was given additional job of worry about unemployment. And the Fed is seen as being independent of the president and power because when you're independent, the theory is you can preserve the currency. You're not a subject to political pressure. And I think that's worked well for our country, and I think most people commented on that have said this worked well, and the Federal Reserve is really the crown jewel of the federal um governmental system in many ways because it's seen as very independent, uh, very merit-oriented, and I think many of the people who are most respected in our country over the years have been chairs of the Federal Reserve like Paul Volcker but and Ben Bernanke. But I I recognize that there are some people who are not happy with uh the fact that interest rates are have not gone down as much as let's say they've gone down in in Europe. But the United States is more complicated economy in some ways than Europe, and Europe had lowered interest rates because their economy was softening so much. They had to uh help the economy move forward. We haven't had that kind of softening. So, um, I J. Powell, uh to his credit, in my view, has not commented on anything that President Trump has said about him. In other words, if it were, if we I was getting beat up every day, or every occasionally from time to time by the president, any president, I probably wouldn't be as quiet as Jay has been. But Jay has basically not responded, not taken the bait. And I think uh he'd like to finish out the term if he could, which finishes in May of '26.
And David, as someone that uh hired Jerome Powell, worked with him for what, eight years at at Carlyle, um how do you think he's taking these criticisms? And are you surprised that he hasn't just the hell with this? I'm I'm stepping down and I'm going to go, you know, enjoy myself for the next couple of years.
I haven't talked to him specifically about it, so I'm just surmising, but my guess is that nobody likes to be criticized by the President of the United States. Who likes to be criticized by the President of the United States? No one really does, but he hasn't responded to any of the criticism, which I give him great credit for doing. I don't think I could have done that, because he's just decided to just take care of the the job he has and worry about getting inflation down, and interest rates will come down when they they are designed to come down. But remember, there is a uh a FOMC of 12 people, seven members from the Federal Reserve board and five rotating members from the various Federal Reserve boards around the country. 12 people, that's the FOMC, the Federal Open Market Committee. And they make the decision. J. Powell is the chairman, presumably he has a lot of influence, but it's not the only person making a decision.
How important is it that the whoever succeeds uh Jerome Powell's Fed chair that they could be someone that is independent from the executive branch, someone that could stand up to the president, you know, because I think some of the thinking, just based on people I've talked to David, is that we get uh someone who has that direct line to President Trump, gets put in there because he promises the president they're going to cut rates, and now this person's doing everything the president asked them to do.
Well, I think the markets would respond better uh if somebody is seen as independent. The candidates that have been mentioned, some of them are excellent. And I think they would be somewhat independent, but obviously, many of them have close relationship with the president. The president made it clear what he wants. Some of the people or candidates have already said they would lower interest rates, so maybe they're their existing view is that interest rates should come down and not because of presidential pressure. But I think overall, it would be a good thing for the country to have a strong Fed chair um to succeed J. Powell rather than a weak Fed chair.
Out of all the names that we've heard uh and have you heard too, David, Kevin Warsh, um Kevin Hassett, Secretary Benson still in the mix, Christopher Waller at the Fed, is there one person out of that that group of four folks that are reportedly leading the uh the nomination uh or or top of mind with the president that you think would would be best suited to do this job at this moment?
I know um I a number of them. I think I know three of them. Uh and I would say they are uh the three that I know um are are all talented, and all could do a good job. But until you get the job, you don't know, you know, how strong somebody's going to be and you don't know how independent they will be. Um so I I just can't say now who'd be better, but I think of the candidates that I know, all of them would be would be able to do a likely a good likely would be able to do a good job.
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