Stephen Miran pledged to lawmakers Thursday that he will act independently if he were confirmed as a new governor on the Federal Reserve Board, but he won’t step down from his current White House post.
He said that he was counseled to take a leave of absence as chair of the Council of Economic Advisers if confirmed to serve on the central bank and then return to the White House after his term is up.
“I have received advice from counsel that what is required is an unpaid leave of absence from the Council of Economic Advisers,” Miran said. He would take the post recently abandoned by Adriana Kugler that expires on Jan. 31.
“Considering the term for which I’m being nominated is a little bit more than four months, that is what I would be taking. As long as that is the advice of counsel, I’ll follow the law.”
Some lawmakers expressed skepticism that Miran would be able to act independently while maintaining his White House post.
Stephen Miran, currently the chair of the Council of Economic Advisers, is sworn in prior to testifying before the US Senate Committee on Banking, Housing, and Urban Affairs. (Win McNamee/Getty Images) ·Win McNamee via Getty Images
“You’re going to be technically an employee of the president of the United States, an independent member of the board of the Federal Reserve. That’s ridiculous,” Sen. Jack Reed (D-R.I.) said.
Miran said that if he were nominated for a term longer than four months, he would resign from the Council of Economic Advisers.
Sen. Chris Van Hollen (D-Md.) asked if the president would have him continue to serve as chair of the Council of Economic Advisers if Miran didn’t vote the way the president wanted.
“I do not know the inside of anyone else’s mind,” Miran said. “What I can tell you is that if I am confirmed in the Federal Reserve, I will act independently based on my own independent analysis of the economy and climate policy.”
Both Republicans and Democrats questioned Miran about the independence of the Fed during a more than two-hour hearing on Thursday.
“I think the Federal Reserve needs to remain quite and completely clear in its independence,” said Sen. Tim Scott (R-S.C.), noting that what Miran told him in private about upholding Fed independence still stands.
Miran told Scott he “couldn’t be more in agreement that independence of the central bank is of paramount importance for the economy, for financial markets, for the long run stewardship of the country.”
In a heated exchange, Sen. Elizabeth Warren (D-Mass.) tried to test whether Miran is independent with a series of questions, including whether President Trump won the election in 2020, to which Miran repeatedly said Congress certified that President Joe Biden won.
Sen. Elizabeth Warren (D-Mass.) questions Stephen Miran, currently the chair of the Council of Economic Advisers, as he testifies before the US Senate Committee on Banking, Housing, and Urban Affairs. (Win McNamee/Getty Images) ·Win McNamee via Getty Images
Miran was also asked whether the Bureau of Labor Statistics faked numbers to make them look good under Biden.
“Just two straightforward questions about your independence, and you’ve blown both of them,” Warren said.
Invoking Warren, Republican Sen. John Kennedy asked Miran, “Are you Donald Trump’s puppet?” Miran replied, “No, I will continue to be independent in my thinking process.”
Kennedy said, “We’re gonna hold you to that. You need to call them like you see them.”
Republican Sen. Mike Rounds asked Miran whether it’s fair for the president to lobby the Fed to move things in a direction he believes can move the economy in a better direction.
Miran said he felt it was important to hear a variety of views, including opposing views, to make the right decision on policy, which would include allowing the president to lobby.
Miran’s nomination to replace former Fed governor Adriana Kugler’s seat was always a chance for Trump to shape the Federal Reserve. But with the president’s contested firing of Fed governor Lisa Cook, the deliberations are becoming much more heated.
Warren and all Democrats on the Senate Banking Committee sent a letter last Friday to committee chair Tim Scott to postpone consideration of all Federal Reserve nominees following what they called Trump’s attempt to “illegally fire” Fed governor Cook.
Will he be in service to President Trump at the Fed? White House Council of Economic Advisers Chair Stephen Miran. (Andrew Harnik/Getty Images) ·Andrew Harnik via Getty Images
Instead of moving forward with Miran’s nomination to the Fed, Banking Committee Democrats urged Scott to hold a hearing on the economic implications of President Trump’s attacks on central bank independence for American families.
Warren has called Trump’s firing of governor Cook “an authoritarian power grab that blatantly violates the Federal Reserve Act, and must be overturned in court.”
In an essay last March for the Manhattan Institute, Miran called for reforms to recalibrate the Fed’s governance to ensure it “remains insulated from day-to-day politics while enhancing its accountability and democratic legitimacy.” Miran argues the Fed suffers from “groupthink” that has led to monetary policy errors.
Specifically, he called for increasing the president’s oversight of the Fed, shortening governors’ current 14-year terms, and imposing bans on what he called the revolving door between the executive branch and the Fed. Yet, Miran, currently chair of the president’s Council of Economic Advisers, would be going from the executive branch to the Fed.
Miran also called for nationalizing the 12 regional Federal Reserve banks and giving the governors of the states in their districts the power to select each regional Fed’s board of directors, which in turn would select the president of the regional Fed bank.
Reshaping the Fed: President Trump at the White House in Washington, D.C., on Sept. 2. (Reuters/Brian Snyder) ·REUTERS / Reuters
The confirmation hearing comes as a federal judge is expected to decide shortly whether the president can fire Lisa Cook for cause as a Federal Reserve governor because of allegations of mortgage fraud.
If President Trump is successful in his attempt to fire Cook for cause, he has suggested Miran could be considered for Cook’s seat — a lengthier term at the Fed that won’t expire until 2038.
“We might switch him to the other — it’s a longer term,” the president said during a Cabinet meeting last week.
TD Cowen’s Jaret Seiberg said, “Both developments could give President Trump control over monetary policy, including whether to substantially reduce interest rates. It also opens the door for Trump to take control of the Federal Reserve banks.”
The committee has voted to advance nominees the following week after confirmation hearings with, for instance, SEC Chair Paul Atkins. The same could happen here, with Miran being voted out of committee next Wednesday or Thursday. That would be followed by a floor vote in the full Senate soon after to have Miran in place for the next Fed policy meeting on Sept. 16-17.
Miran’s appointment would add not only a Trump administration official to the Fed board, but also another member who is in favor of the central bank cutting interest rates as soon as its September policy meeting.
Jennifer Schonberger is a veteran financial journalist covering markets, the economy, and investing. At Yahoo Finance she covers the Federal Reserve, Congress, the White House, the Treasury, the SEC, the economy, cryptocurrencies, and the intersection of Washington policy with finance.
