A former Federal Reserve official has taken the unusual step of taking a direct moral stance against the president of the United States following Donald Trump’s anemic response to a racist terrorist attack in Charlottesville.
Narayana Kocherlakota, the former president of the Minneapolis Fed, took to Twitter to amend an earlier article he had addressed to Trump urging him to reappoint Janet Yellen to a second term as Fed chair. Her first term expires early next year.
Trump has said Yellen is one of the people he is considering, but has also shown a strong preference for appointing his current head of the National Economic Council, former Goldman Sachs president Gary Cohn, to lead the US central bank.
Kocherlakota’s correction? Trump should still appoint her, but Yellen should turn him down, because otherwise she would be tainted by a presidency that he suggests has now abdicated its moral authority.
“My advice to the president remains unchanged,” he said. “But my advice to Chair Yellen is to decline any such offer from Trump.”
“Being appointed by Trump to this position (any position) means — at least implicitly — that you approve of his goals for the United States,” Kocherlakota said.
“I am lucky enough to know Janet Yellen well — and I know that her vision for America is highly distinct from that of Trump’s,” he added. “Accepting Fed chair job from him would send a signal that she would regret — and possibly deeply.”
Kocherlakota praised Yellen’s tenure as Fed chair as “outstanding,” adding that “she should not risk any mark on that record.” Here’s the full Twitter chain, and the responses to it.
Some context: Cohn and Yellen are Jewish, and the president’s comments were seen as giving cover to the openly anti-Semitic chants being shouted by white supremacists in Charlottesville. Cohn has leaked the idea that he is “upset” but has shown no inclination to quit, although rumours that he might shook financial markets Thursday, sending the Dow to its worst day since May.
The Federal Reserve Chair is arguably the most powerful economic policymaking position in the world, since the role requires both management of interest rate policy and bank regulation for the world’s largest economy.
A potential Cohn departure would not only constitute a nail in the coffin of the president’s already hobbled economic agenda, it would also precipitate renewed market speculation about who Trump might appoint instead, potentially reinfecting some volatility into a complacent, ever-bullish market.
Other names that have been floated are ex-Fed Governor and Morgan Stanley banker Kevin Warsh, Stanford University’s John Taylor, a former senior Treasury official, and Glenn Hubbard, a financial consultant who is also the head of Columbia University’s Business School.
But Kocherlakota believes integrity is what is truly at stake: “The bigger issue is, you will be remembered as having said yes to this president? That is likely to be a source of regret.”
Accepting Fed chair job from him would send a signal that she would regret – and possibly deeply. 5/
— NRKocherlakota (@kocherlakota009) August 17, 2017
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