Federal Reserve Board Vice Chairman Stanley Fischer unexpectedly announced his resignation last week. He will resign from the board in October, meaning that President Trump will now be able to appoint at least 4 of the 7 members of the Federal Reserve’s Board of Governors, thus making an immediate impact on monetary policy and potentially impacting monetary policy for decades to come.
The Board of Governors of the Federal Reserve System consists of 7 Governors, each of whom is appointed to a 14-year term, with those terms expiring every two years. So one term will expire in 2018, another in 2020, another in 2022, 2024, 2026, 2028, and 2030. With Fischer’s resignation, the terms that expire in 2018, 2020, 2022, and 2030 will now be vacant. The successor to the 2018-expiring term will serve until 2032. President Trump has already nominated Randal Quarles to that term.
The term that expires in 2030 is vacant, and appointing someone to the 2020-expiring term would mean that that appointee could be reappointed in 2020 to serve until 2034, giving President Trump an opportunity to have three appointees on the Federal Reserve Board until the 2030s. If Chairman Yellen is not reappointed to her term as Chairman, she may resign her term as Governor too, opening up the slot that expires in 2024, and giving President Trump the opportunity to appoint a fifth candidate to the Board just in his first term.
That is an unprecedented opportunity. Normally a President only gets two opportunities in his first term to appoint new members to the Board. While the bureaucratic and institutional inertia within the federal government is immense, being able to appoint a majority of the Board could still allow President Trump to fundamentally alter the conduct of monetary policy. President Trump should take full advantage of the opportunity that is given to him by appointing solid candidates who turn the ship around and undo the reckless and irresponsible money printing of the past decade that has devalued the dollar and diminished the standard of living of ordinary Americans.