Trump Lashes Out at Powell. But Can the President Fire the Fed Chair?

Summary

WSJ What’s News - Episode Summary: "Trump Lashes Out at Powell. But Can the President Fire the Fed Chair?" Release Date: April 17, 2025

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1. President Trump's Criticism of Fed Chair Jerome Powell

The episode opens with President Donald Trump intensifying his criticism of Federal Reserve Chair Jerome Powell. Following Powell's recent remarks about the Fed facing a challenging balance between managing tariffs and supporting the economy, Trump took to Truth Social to express his dissatisfaction.

• Trump's Statement (00:48):

  "Powell's termination cannot come fast enough... he's always too late and wrong... he should be cutting interest rates as other central banks have done."

Later, during a press conference in the Oval Office alongside Italian Prime Minister Giorgio Maloney, Trump reiterated his stance when questioned about Powell's commitment to his position.

• Trump's Clarification (01:52):

  "Oh, he'll leave if I ask him to... I don't think he's doing the job. He's too late. Always too late... I'll let him know it and if I want him out, he'll be out of there real fast, believe me."

2. Legal Boundaries of Presidential Authority Over the Federal Reserve

Host Alex Osila delves into the feasibility of Trump's threats with insights from WSJ Chief Economics Commentator Greg Ip.

• Discussion with Greg Ip (02:24):

  Ip explains: "Under the law right now, the Fed chair is one of seven governors and the law says governors can only be fired for cause. So, the plain reading of the statute is, no, the President cannot fire the Fed chair."

Ip further elaborates on a pending Supreme Court case that could influence this power dynamic.

• Continuation (03:07):

  Ip states: "If the Supreme Court decides to reinterpret the 1935 Humphrey's Executor case, it might open the door for the President to fire any Fed member, including the chair. This would likely lead to a significant clash between the Fed and the White House."

3. Google's Illegal Monopoly Ruling

A federal judge has pronounced Google as an illegal monopolist in online advertising, marking the second such ruling within eight months.

• Ruling Details (04:17):

  Jan Wolf, WSJ Business Legal Affairs Correspondent, explains the implications: "The judge agreed that Google has an unlawful monopoly in two distinct markets... This finding of liability means Google may have to sell off some of its advertising products, which are significant revenue sources for the company."

Google plans to appeal the portions of the decision unfavorable to them.

4. Struggles within Wall Street's Private Equity Firms

Private equity giants like Apollo Global Management, Blackstone, and KKR are experiencing significant stock declines, down over 20% this year—a stark contrast to broader market trends.

• Analysis with Miriam Gottfried (08:30):

  Gottfried highlights: "Private equity firms had expanded aggressively in 2021, but rising interest rates have made profitable exits challenging. Combined with recent tariff uncertainties, firms are hesitant to buy or sell, leading to a stagnation in fundraising and profitability."

She emphasizes that resolving these issues requires greater market certainty, particularly regarding tariff policies.

• Further Insights (10:12):

  Gottfried notes: "More market certainty around tariffs would allow firms to plan and move forward. Additionally, investor pressure for returns may eventually force firms to act, even amidst uncertainty."

The stagnation in private equity not only affects the firms themselves but also has broader implications for Wall Street, impacting banks and law firms that rely on fees from these transactions.

5. Additional Market Highlights

• Stock Market Movements:

  • Dow Jones: Fell 1.3%, led by a significant drop in UnitedHealth Group following disappointing earnings projections.
  • Nasdaq: Slight decline of about 0.1%.
  • S&P 500: Marginal gain of approximately 0.1%.

• Netflix’s Financial Performance: Netflix reported a robust first-quarter performance with revenue reaching $10.5 billion, a 12.5% year-over-year increase, and net income rising nearly 24% to almost $3 billion. The company anticipates continued growth in the second quarter driven by price hikes, membership expansion, and new advertising revenue streams.

• Housing Market Data: New Census Bureau figures reveal an 11.4% drop in housing starts in March compared to February, the steepest decline in a year. High home prices and mortgage rates have suppressed buyer activity, leading builders to reduce construction efforts.

• U.S.-China Economic Relations: A Pew Research Center survey indicates that Americans perceive economic ties with Beijing as more beneficial to China than the U.S. Additionally, there is skepticism about the effectiveness of increased tariffs, with many Americans believing that higher tariffs would negatively impact the U.S. economy and their personal finances.

6. Trump Administration’s Threat Toward Harvard University

In a controversial move, the Trump administration threatened to revoke visas for international students at Harvard University, alleging the institution fostered a hostile environment for Jewish students. Homeland Security Secretary Kristi Noem labeled hosting international students as a privilege, not a right, and demanded information from Harvard by April 30th.

• Harvard's Response: Harvard President Alan Garber condemned the demands, calling them an "illegal attack on the school's independence," signaling potential legal and public relations battles ahead.

7. European Central Bank's Interest Rate Cuts

Amid economic strains from tariffs, the European Central Bank (ECB) announced a reduction in key interest rates from 2.5% to 2.25%. This marks the seventh rate cut in eight meetings, bringing borrowing costs to their lowest since early 2023, aimed at mitigating the adverse effects of increased tariffs on the European economy.

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Conclusion

This episode of WSJ's What’s News navigates through significant developments affecting the U.S. and global economies. From the escalating tensions between President Trump and the Federal Reserve, legal battles over presidential powers, antitrust rulings against tech giants like Google, to the precarious state of private equity firms, the discussions underscore the intricate interplay between politics, law, and financial markets. Additionally, updates on housing trends, international education policies, and central bank strategies provide listeners with a comprehensive overview of factors shaping today's economic landscape.

Transcript

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[Alex Osila]

President Trump hints at dismissing Fed Chair Jerome Powell. But can he do that?

[Greg Ip]

If the President gets his way, it essentially turns the Fed chairman into an at will employee like the Treasury Secretary. And it means that monetary policy is effectively under the control of the president.

[Alex Osila]

Plus, a federal judge rules that Google operates an illegal monopoly of online advertising. And private equity, one of Wall Street's most consistent profit engines, is close to breaking down. It's Thursday, April 17th. I'm Alex Osila for the Wall Street Journal. This is the PM edition of what's news, the top headlines and business stories that move the world today. Today, President Trump has taken aim at Fed Chair Jerome Powell. Yesterday, Powell had warned that the Fed could face a difficult trade off as tariffs raise prices and weaken the economy. This morning, Trump posted on Truth Social that, quote, powell's termination cannot come fast enough, adding that the Fed chair, quote, is always too late and wrong and that he should be cutting interest rates as other central banks have done. Later this afternoon, in a press conference in the Oval Office with Italian Prime Minister Giorgio Maloney, Trump was asked again about Powell. The reporter noted that Powell says he won't leave even if Trump asks him to.

[Donald Trump]

Oh, he'll leave if I ask him to. He'll be out of there. But I don't think he's. I don't think he. I don't think he's doing the job. He's too late. Always too late. Little slow. And I'm not happy with him. I let him know it and if I want him out, he'll be out of there real fast, believe me.

[Alex Osila]

So can Trump do this? I'm joined now by WSJ chief economics commentator Greg ip. Okay, Greg, give it to me straight. Can the President fire the Fed chair?

[Greg Ip]

Well, under the law right now, the Fed chair is one of seven governors and the law says governors can only be fired for cause. So that tells you that the plain reading of the statute is, no, the President cannot fire the Fed chair. There is a more ambiguous question about whether he can demote the Fed chair to being just another governor. And I don't think there's a clear answer on that. But the straight off answer is no, that Trump cannot fire the Fed chair.

[Alex Osila]

Earlier this year, Trump fired two federal officials who later sued, arguing that the firings were illegal. Now the Supreme Court is considering the dispute. While the case is not directly about the Federal Reserve, it could determine whether President Trump can fire the Fed chair. So what would a ruling in the administration's favor mean for the president?

[Greg Ip]

The decision in question dates back to 1935. It's called Humphrey's Executor. And in it, the Supreme Court said Congress is fully able to bar the President from firing members of independent commissions for reasons other than cause. So a few months ago, the president fired a member of the National Labor Relations Board. She is suing to get her job back. And when the Supreme Court rules on that case, they may decide if that 1935 precedent still stands or they may knock it down. If they knock it down and it is interpreted in such a way that this is also true of the Fed, then in some sense the road is open for Trump to also fire any member of the Fed that he wants, including the Fed chairman. Now, we don't know whether he will actually do that. And it's also likely the case that Jay Powell will not go if the President fires him and that he will pursue his own legal options in that instance. But I think it's fair to say that we'd be heading for a fairly disruptive and significant clash between the Fed and the White House.

[Alex Osila]

That was WSJ chief economics commentator Greg ip. Thank you, Greg.

[Greg Ip]

All right, thanks for having me.

[Alex Osila]

Tensions between the White House and the Fed could unnerve investors who see the bank's independence as a foundational appeal of U.S. markets. Major U.S. indexes ended the day mixed. The Dow fell 1.3%, dragged lower by UnitedHealth Group. Its stock fell more than 20% after the health care company reported earnings that fell short of Wall Street's expectations. And it substantially downgraded its projected results for 2025. The Nasdaq slipped about 0.1%, while the S&P 500 rose about 0.1%. A federal judge ruled today that Alphabet's Google created an illegal monopoly that allowed it to control parts of the online advertising industry. The ruling marked the second time in eight months that a US Judge labeled Google an illegal monopolist and could lead the Justice Department to seek a forced sale of some of the company's advertising products. The Justice Department didn't win on all of its legal claims. The judge rejected the government's position that Google unlawfully monopolized a third market within the ad tech industry, the market for networks that help advertisers buy display ads across the open Web. A Google vice president said that the company would appeal the parts of the decision that it lost. WSJ business legal affairs correspondent Jan Wolf told our Tech News Briefing podcast what the decision could mean for Google.

[Jan Wolf]

It's a pretty forceful victory for the government. The judge agreed that Google has an unlawful monopoly in two distinct markets, servers and publishers. Basically there's two different sorts of tools that are used to place ads online, where Google is just dominant. And it achieved that domination unlawfully. And it matters because now that there's this finding of liability, the next phase is for the same judge to hold a remedies trial where she would decide here is some sort of judicial remedy I can impose that would restore competition. And in the worst case scenario, Google would have to sell off some of its advertising products, which are really a cash cow for the company.

[Alex Osila]

To hear more from Jan, listen to tomorrow's episode of Tech News Briefing. Higher than expected subscription and ad revenue helped Netflix beat its forecast for core metrics in the first three months of the year. The company reported 10 and a half billion dollars in revenue in the first quarter, up 12 and a half percent year over year. Net income rose about 24% to almost $3 billion, beating its forecast of 2.44 billion. The streamer said it expects even stronger revenue growth in the second quarter as it anticipates recent price increases, continued membership growth and fresh advertising revenue. New Census Bureau data out today shows that housing starts, a measure of home construction, dropped 11.4% in March from February. That marked the steepest plunge in a year. Stubbornly high home prices and mortgage rates have kept home buyers on the sidelines for months. Muted demand has discouraged builders from putting more shovels in the ground. And a survey from Pew Research center out today showed that Americans view economic ties with Beijing as less beneficial to the US Than to China. But they're also skeptical about addressing the relationship with tariffs, saying that increased tariffs on China would be bad for the US and for them personally. The survey was conducted in the final full week of March after President Trump slapped the first new tariffs of his second term on China, but before a back and forth between the two countries propelled tariff rates into the triple digits. Coming up, why Wall Street's private equity fee machine is grinding to a halt. That's after the break.

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[Alex Osila]

Private equity is one of Wall Street's most consistent fee generators, but that money maker now looks close to breaking down. For more, I'm joined by Miriam Gottfried, who covers private equity. Miriam Shares of fund managers like Apollo Global management, Blackstone and KKR are down 20% or more this year, and that's way more than the broader market. What's going on here?

[Miriam Gottfried]

Well, even before the recent tariff turmoil, these firms were facing pressure on one of their key businesses, which is private equity. A lot of firms, not just these publicly traded ones, went out and bought companies in 2021. Since then, of course, interest rates have risen a lot, which makes it a lot harder to exit the companies either by selling them or taking them public at a profit because so much of the expectation was built into this model of lower interest rates. So firms have just been sitting on these companies, which means that they haven't returned that much cash to their investors, which means that those investors in turn have not returned that cash to them in the form of new fundraising. Of course, now we have tariffs, which just makes things worse that logjam is not coming unstuck anytime soon. Now we have a 90 day pause on many of these reciprocal tariffs and that means there's a lot of uncertainty and people don't really want to go out and sell companies or buy companies because they don't really know whether the tariffs will be in place. They don't know what the right price is. They don't know if these valuations are the valuations that are going to stick. So it's basically just caused a long pause on an already stuck thing.

[Alex Osila]

What would it take to get private equity back on track?

[Miriam Gottfried]

You really need more market certainty. If we could say even these are the tariffs and these are the tariffs that are going to be in place for X amount of time, then people would be able to model that and they would know what their cost structure is and they might be able to move forward. There's also the time factor. Firms might not want to sell them right now, these companies that they've been sitting on. But they might have to because at a certain point, your investors, your limited partners need their money back.

[Alex Osila]

What does how these firms are doing mean for the broader market?

[Miriam Gottfried]

What it really means is a lot for Wall street because the fee paying potential of these firms is very great. Banks, lawyers, they all exist off of these fees that these private equity firms pay. Of course, big firms like Apollo, Blackstone, kkr, they have many other business lines. They aren't solely reliant on private equity.

[Alex Osila]

That was WSJ reporter Miriam Gottfried. Thank you, Miriam. Thanks. The Trump administration has threatened to stop international students from attending Harvard University. A letter from Homeland Security Secretary Kristi Noem said that hosting international students was a privilege, not a guarantee, and that because Harvard had, quote, created a hostile learning environment for Jewish students, the administration was requesting information about visa holders by April 30th. Harvard President Alan Garber has called the demands an illegal attack on the school's independence. And the European Central bank cut interest rates today to offset the economic blow of tariffs. The ECB lowered its key interest rate to 2 and a quarter percent from 2.5%, its seventh cut in eight meetings, taking borrowing costs to their lowest level since early 2023. And that's what's news for this Thursday afternoon. Today's show is produced by Anthony Banci with supervising producer Michael Kosmides. I'm Alex Zosola for the Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.