July 22 (UPI) — Federal Reserve Chair Jerome Powell spoke of a need to unify and maintain a “safe, sound and efficient” U.S. banking system within hours of Treasury Secretary Scott Bessent calling the embattled central bank chief a “good public servant” and suggesting Powell finish his term despite ongoing fire by the White House.
Powell said Tuesday in Washington at the Fed’s integrated review conference on capital framework for large banks that federal banking regulators need to “make sure that our supervisory practices focus on the critical areas that determine safety and soundness.”
“We need our large banks to be well capitalized and to manage their key risks well,” Powell said in remarks to industry veterans, academics, and current and former policymakers.
“And we need large banks to be free to compete with one another, with nonbank financial firms, and with banks in other jurisdictions to provide capital and support economic growth,” he added.
Powell, who has given no indication he plans to step down, has faced a barrage of open public criticism by U.S. President Donald Trump for the Fed’s decision not to lower interest rates.
For months, Powell and America’s bank system leaders have been clear in their “wait-and-see” approach over the impact Trump’s often-changing tariff policies will have on inflation and the U.S. economy before taking any further steps.
Powell, who was nominated by Trump to his role, has said he will not influence decisions of the independent Federal Reserve Board of Governors.
On Tuesday, the treasury secretary shared positive words on Powell and repeated a desire to see an “entire” review of the central bank’s finances and operations.
“I know Chair Powell. There’s nothing that tells me that he should step down right now,” Bessent said in a TV interview. “He’s a good public servant.”
But Bessent shared vague support on if Powell should carry on in the job.
“His term ends in May,” he commented. “If he wants to see that through, I think he should. If he wants to leave early, I think he should.”
However, a noted business and academic leader disagreed with Bessent, admitting it “isn’t the consensus view” and called on Powell to resign over fears of the central bank’s autonomous status.
“If Chair Powell’s objective is to safeguard the Fed’s operational autonomy (which I deem vital), then he should resign,” Mohamed El-Erian, president of Britain-based Queens College, posted Tuesday on X.
El-Erian warned of the “growing” and “broadening” events, he said, “playing out now” that threaten the independent U.S. Federal Reserve from political or other outside influence should Powell remain chair. He added his belief that “most” of the speculated candidates to replace Powell “would be able to calm any potential market jitters.”
Meanwhile, the rate-setting Federal Open Market Committee is slated to meet next week where it’s expected again hold the line on interest rates again over Trump’s tariff and inflation worries.