Donald Trump came into the White House with an opportunity to have the greatest impact on the Federal Reserve Board at one time of any president since Woodrow Wilson in 1913. That was the year the Federal Reserve was created and the Fed Board was vacant except for two seats reserved by statute, including one for the Secretary of the Treasury; (those statutory seats were eliminated in 1934, and today all appointments are made by the president). In effect, Wilson had an “empty board” and could make whatever appointments he wished. When Trump came into office, there were three vacancies on the seven-member board. However, two more vacancies opened up quickly as Vice Chair Stan Fischer announced his early retirement, and Chair Janet Yellen’s term expired on Feb. 1, 2018. Technically, Yellen could have remained on the board as a governor even after her term as chair expired, but that’s rare and Yellen chose to leave the board entirely. That gave Trump five appointments out of seven seats; the only two holdovers were Jay Powell, the new Chair, and Lael Brainard, a Democrat. In addition, Bill Dudley stepped down as President of the New York Fed, a regional reserve bank. The New York Fed president is a permanent voting member of the Federal Open Market Committee, FOMC, which sets interest rate policy, so the New York seat is more important than the other eleven regional reserve bank presidents. Trump cannot appoint the NY Fed President directly, but is in a position to exert some influence. In short, Trump owned the Fed and could make sweeping changes in policy and personnel if he wanted. What did Trump do? He played it safe. As this article describes, Trump nominated Randy Quarles, Marvin Goodfriend, Richard Clarida, and Michelle Bowman to fill four of the five vacancies. Quarles is a regulatory expert and won’t have much to say on interest rate policy. Bowman takes a seat reserved for community bankers, and likewise won’t be a voice on monetary policy. Clarida and Goodfriend are both mainstream Ph.D. economists who won’t rock the boat. Finally, the replacement for Dudley in New York is John Williams, currently president of the San Francisco Fed. Williams is another Ph.D. economist and what the elites call “a safe pair of hands.” What should we expect going forward? Expect more of the same. Trump’s new Fed board is old wine in new bottles. Trump shows little knowledge of the minutiae of monetary policy. It seems the elites circled the wagons to influence the White House to insure nothing really changed at the Fed. It worked.

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