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Tag: Banking and Financial Institutions

  • Trump’s Appointees Could Rule the Fed for Decades

    Note: Powell was appointed as governor by Obama and nominated as chair by Trump.

    When President Trump took office in 2025, just two of the seven seats on the Federal Reserve’s Board of Governors were held by his appointees. He had also elevated Jerome H. Powell to the chair position during his first term.

    Note: Powell was appointed as governor by Obama and nominated as chair by Trump.

    A seat opened up earlier this month when a Biden appointee stepped down. And on Monday, Mr. Trump announced that he was planning to fire another Biden-appointed member of the board. If he succeeds, a majority of the Federal Reserve Board will have been appointed by Mr. Trump.

    Notes: Kugler announced her resignation Aug. 1, and it took effect Aug. 8.

    Mr. Trump has made no secret of his desire to reshape the top ranks of the Fed, repeatedly lashing out at Mr. Powell and his colleagues for keeping interest rates too high.

    Mr. Trump’s first opportunity to remake the Fed roster came sooner than expected with the resignation of Adriana D. Kugler. He is working to create another with the firing of Lisa D. Cook over allegations of mortgage fraud. Fed governors can be fired only “for cause,” generally understood to mean gross misconduct.

    Ms. Cook, who has not been charged with wrongdoing or convicted of a crime, said she would not leave, and her lawyer said she would sue to challenge the dismissal. In a statement, a spokesman for the Fed emphasized the central bank’s independence but said it would “abide by any court decision.”

    If Mr. Trump succeeds in removing Ms. Cook, he will be able to appoint another governor to serve out her term, which ends in January 2038.

    Mr. Trump has already nominated Stephen Miran, his top economic adviser, to serve out Ms. Kugler’s term.

    With Cook’s dismissal, Trump-appointed board members could soon be a majority at the Fed

    Presidents appoint Fed governors to staggered 14-year terms, meaning one term expires every two years. The structure is meant to safeguard the Fed’s independence, preventing a president from packing the board and ensuring the Fed governors can consider a longer-term horizon than Congress or the president.

    “The idea is that you can do something for the long-term health of the country that could be a short-term political loss,” said Aaron Klein, a senior fellow at the Brookings Institution.

    In reality, most do not serve out the full 14 years, and previous presidents have had the opportunity to appoint multiple board members.

    But in the past, board nominations were relatively nonpartisan, Mr. Klein said.

    “Governors were routinely nominated by one party and renominated by the other,” he said, pointing to Mr. Powell as an example. Mr. Powell, a registered Republican, was appointed to the board by President Barack Obama, nominated as chair by Mr. Trump and renominated by President Joseph R. Biden Jr.

    But this time, Mr. Klein said, Mr. Trump is seeking to install loyalists who favor his economic policies. “What is unique is that these are governors who are likely to do what Trump says, and if not, he’ll fire them.” Mr. Klein added that Mr. Trump’s actions, if allowed to proceed, would “eviscerate” the principle of central bank independence.

    Mr. Trump’s nominees would need to be confirmed by the Senate, which is back in session Sept. 2 — in time for the Fed’s next rate-setting meeting Sept. 16-17.

    During last month’s meeting, Christopher J. Waller and Michelle W. Bowman, both Trump appointees, voted against the central bank’s decision to leave interest rates unchanged, preferring instead to cut rates.

    In a twist of timing, Mr. Powell just last week gave his strongest indication yet that the central bank was ready to resume rate cuts as soon as September.

    Another key opportunity to reshape the board will arise in May, when Mr. Powell’s term as chair is set to expire. He can then stay on as governor until January 2028. That would be atypical; most of the time, Fed chairs step down to avoid undercutting the authority of the new chair. Mr. Powell has declined to share his plans.

    The power of the Federal Reserve Board goes beyond voting on rates. Members also approve and reappoint the Fed’s regional presidents, who are responsible for financial regulation in their region, including funding for bailouts. In February, all 12 presidents’ terms will expire, and they will need to be reappointed by the board.

    What is typically a pro forma matter could provide Mr. Trump with another opportunity to overhaul the Fed system, Mr. Klein said.

    “A Trump-loyal Board of Governors could get rid of them all,” he said.

    Lily Boyce and Christine Zhang

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  • Read a letter from Sam Bankman-Fried’s father.

    Read a letter from Sam Bankman-Fried’s father.

    Case 1:22-cr-00673-LAK Document 407-3 Filed 02/27/24
    Page 3 of 4
    programming staff used it for a Hackathon. Sam lived in it and – paid rent for that privilege – for
    six months-about half of the time he was in the Bahamas. Even when he was officially living in
    the apartment, he was more likely to be found elsewhere – often sleeping on a bean bag chair in
    the office. Like everything about Sam, that wasn’t an affectation. He just doesn’t care about the
    creature comforts that most of us value. He is similarly uninterested in hobnobbing with the rich
    and famous and generally uncomfortable with attention. He did what he thought he had to do for
    the good of the company, often at some significant personal cost to himself. What FTX spent on
    advertising, travel, and housing is in line with what comparable multibillion dollar companies
    spend, and a small fraction of what many do spend. For anyone who knows Sam, the popular
    portrayal of him as a high-rolling, celebrity-secking, CEO driven by greed is simply bizarre.
    I am the son of a small businessman and told Sam what I believe my father would have told him:
    take some money out for yourself and put it somewhere safe. Or buy something special, so you
    can enjoy life more. Others, including senior counsel, told Sam the same thing. According to
    one business journal, by 2022, Sam had a net worth of more than $20 billion. He could easily
    have sold a billion dollars’ worth of stock. He wouldn’t do that, though. He wanted to leave
    every penny in the business to finance its growth. He had a salary of $200,000, which was more
    than enough for his personal consumption needs. He had nothing “salted away” when the crash
    came.
    Barbara and I stayed with Sam in the Bahamas for the month following the collapse, and
    witnessed firsthand his single-minded focus on getting money back to depositors, long after there
    was any possibility he would be able to save any of his equity or wealth. About a week after the
    implosion, Sam and I were speaking to a prospective defense counsel. The lawyer was aghast
    when Sam told him that he was spending all of his time working with the Bahamian government
    to get depositors their money back. The lawyer strongly advised Sam to focus on his defense.
    “Are you aware,” asked the lawyer, “that even as we speak, there is probably a room of bright,
    hard-working and ambitious people somewhere whose goal is to put you in jail?”
    “Yup,” answered Sam, “and that’s pretty much irrelevant to me compared to helping depositors.”
    I recognize that the Sam I have described is strongly at odds with how the public sees him, and
    may seem unbelievable to the readers of this letter, including this court. I could add hundreds of
    other examples of his kindness and genuine and deep concern for others, but I’m not sure how
    much difference they would make, and doing so would surely try the patience of readers. I will
    add only that were the social costs of saying anything positive about Sam at this moment in time
    not prohibitive, I am confident many others who have known him throughout his life would
    describe much the same person.
    I want now to return to the challenges I referred to at the start, and their implications for
    sentencing. Sam has struggled throughout his life to learn and control things most of us take for
    granted, such as eye contact, small talk, and responding to social cues.
    There is a positive side to this struggle. Sam’s life experience has made him tolerant of
    diversity in the way most of us cannot be. Sam hired employees with communication
    difficulties so great that they could not otherwise get or keep another job. I remember him
    3
    Ex. A-2

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  • Read a letter from Sam Bankman-Fried’s father.

    Read a letter from Sam Bankman-Fried’s father.

    Case 1:22-cr-00673-LAK Document 407-3 Filed 02/27/24
    Page 3 of 4
    programming staff used it for a Hackathon. Sam lived in it and – paid rent for that privilege – for
    six months-about half of the time he was in the Bahamas. Even when he was officially living in
    the apartment, he was more likely to be found elsewhere – often sleeping on a bean bag chair in
    the office. Like everything about Sam, that wasn’t an affectation. He just doesn’t care about the
    creature comforts that most of us value. He is similarly uninterested in hobnobbing with the rich
    and famous and generally uncomfortable with attention. He did what he thought he had to do for
    the good of the company, often at some significant personal cost to himself. What FTX spent on
    advertising, travel, and housing is in line with what comparable multibillion dollar companies
    spend, and a small fraction of what many do spend. For anyone who knows Sam, the popular
    portrayal of him as a high-rolling, celebrity-secking, CEO driven by greed is simply bizarre.
    I am the son of a small businessman and told Sam what I believe my father would have told him:
    take some money out for yourself and put it somewhere safe. Or buy something special, so you
    can enjoy life more. Others, including senior counsel, told Sam the same thing. According to
    one business journal, by 2022, Sam had a net worth of more than $20 billion. He could easily
    have sold a billion dollars’ worth of stock. He wouldn’t do that, though. He wanted to leave
    every penny in the business to finance its growth. He had a salary of $200,000, which was more
    than enough for his personal consumption needs. He had nothing “salted away” when the crash
    came.
    Barbara and I stayed with Sam in the Bahamas for the month following the collapse, and
    witnessed firsthand his single-minded focus on getting money back to depositors, long after there
    was any possibility he would be able to save any of his equity or wealth. About a week after the
    implosion, Sam and I were speaking to a prospective defense counsel. The lawyer was aghast
    when Sam told him that he was spending all of his time working with the Bahamian government
    to get depositors their money back. The lawyer strongly advised Sam to focus on his defense.
    “Are you aware,” asked the lawyer, “that even as we speak, there is probably a room of bright,
    hard-working and ambitious people somewhere whose goal is to put you in jail?”
    “Yup,” answered Sam, “and that’s pretty much irrelevant to me compared to helping depositors.”
    I recognize that the Sam I have described is strongly at odds with how the public sees him, and
    may seem unbelievable to the readers of this letter, including this court. I could add hundreds of
    other examples of his kindness and genuine and deep concern for others, but I’m not sure how
    much difference they would make, and doing so would surely try the patience of readers. I will
    add only that were the social costs of saying anything positive about Sam at this moment in time
    not prohibitive, I am confident many others who have known him throughout his life would
    describe much the same person.
    I want now to return to the challenges I referred to at the start, and their implications for
    sentencing. Sam has struggled throughout his life to learn and control things most of us take for
    granted, such as eye contact, small talk, and responding to social cues.
    There is a positive side to this struggle. Sam’s life experience has made him tolerant of
    diversity in the way most of us cannot be. Sam hired employees with communication
    difficulties so great that they could not otherwise get or keep another job. I remember him
    3
    Ex. A-2

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