Trump turns up heat on Fed chair over possible ‘fraud’
While the president reportedly drafted a letter firing Jerome Powell, he told reporters he doesn’t intend to follow through — unless there’s cause.
Key points:
- President Donald Trump showed some members of Congress a letter informing Fed Chair Jerome Powell that he is out of a job, The New York Times reported.
- Though Trump has said publicly that he does not plan to fire Powell, he has been calling for the Fed chair’s resignation for months.
- Elsewhere in the nation’s capital, new legislation aspires to eliminate the federal capital gains tax on sales of primary residences.
- The Senate passed the VA Home Loan Reform Act on Tuesday, a moved praised by NAR for putting veterans “on equal footing with other homebuyers."
The battle between Donald Trump and Jerome Powell intensified this week when the president reportedly flashed a draft of a letter firing the Federal Reserve chair before a group of House Republicans.
But the very next day, Trump denied that he was considering the move, telling reporters, "We're not planning on doing anything."
Will Trump fire Powell?
Trump cannot legally fire Powell without cause. However, a recent congressional investigation request made by Federal Housing Finance Agency (FHFA) Director Bill Pulte suggests officials are exploring whether cause for his removal could be found in connection with comments Powell made about renovation plans for the Fed's headquarters.
Both Trump and Pulte have repeatedly criticized Powell for the Fed's ongoing freeze on short-term interest rates, demanding that he either cut rates or resign. Powell has defended the central bank's monetary policy decisions, citing tariff uncertainty, the risk of rising inflation and strong jobs data as reasons to hold off on cutting rates.
On July 15, Trump was meeting with a handful of Republican members of Congress to discuss an unrelated legislative topic when he showed them the draft of his letter informing Powell of his firing and asked for their opinions, The New York Times reported.
When questioned the next day about whether he will fire the Fed chair, Trump brushed off the idea, telling reporters, "He's doing a lousy job, but no, I'm not talking about that."
When pressed on the issue, however, Trump said he won't "rule out anything," but added, "I think it's highly unlikely — unless he has to leave for fraud. I mean, it's possible there's fraud involved with the $2.5, $2.7 billion renovation."
The renovation at the heart of the claims
Powell spoke of the Fed's renovation plans while testifying before Congress in June. Shortly thereafter, both Trump and Pulte began questioning the project, with Pulte calling for a congressional investigation in early July.
According to multiple media reports, Powell has requested that the Fed's inspector general take another look at the plans, which were reviewed previously. Powell asked for the review "a few weeks ago," an unnamed source told CNN, which indicates the request came prior to Pulte's prompting for an investigation.
Scrapping capital gains taxes on home sales?
In other D.C. news, Rep. Marjorie Taylor Greene of Georgia is proposing new legislation that would eliminate federal capital gains taxes on home sales. Greene introduced the No Tax on Home Sales Act on July 10.
In addition to providing tax relief, the bill would spark market activity by "removing a key disincentive to selling," according to a press release from Greene's office.
"Families who work hard, build equity, and sell their homes should not be punished with massive tax bills," Greene said. "The capital gains tax on home sales is an outdated, unfair burden — especially in today's housing market, where values have skyrocketed. My bill fixes that."
The president has indicated support for the bill, telling reporters that it "could be a very big positive."
Congress boosts support for veteran homeowners, buyers
The Senate on July 15 passed the VA Home Loan Reform Act, a move that now sends the legislation on to Trump for his signature. The legislation revises the VA Home Loan Program in a way that will help veterans avoid foreclosure, an update that the Senate Committee on Veterans' Affairs estimates will benefit over 20,000 current borrowers.
The National Association of Realtors applauded the bill's passage in a July 16 statement, explaining that the bill also puts veterans "on equal footing with other homebuyers" by enabling them to pay real estate agents directly.
"We are grateful to the House of Representatives and the Senate for passing this measure and providing veterans and active-duty service members the same advantages as other buyers in a competitive real estate market," said Shannon McGahn, NAR's executive vice president and chief advocacy officer.
"NAR remains committed to protecting the brave men and women who serve this country in the armed forces and ensuring they are given equal opportunities to achieve the American Dream of homeownership."