Rep. David Kustoff was caught off guard when he received an unusual request for a meeting last year: Would he be interested in a one-on-one conversation with the chairman of the Federal Reserve?
Kustoff was a freshman congressman, just over a year into his term and a junior member of the Financial Services Committee. Jerome Powell had just been named head of the nation’s central bank, turning him into one of the most powerful figures in the global economy. Yet Powell offered to trek across town to chat with Kustoff in the congressman’s office on Capitol Hill.
“I was pleasantly surprised because you don’t see that very often,” said Kustoff, a Republican from Tennessee.
Their meeting on Feb. 7, 2018 — two days after Powell was sworn in — was just the first stop in the chairman’s charm offensive on Capitol Hill. By law, the head of the central bank is only required to appear before Congress four times a year. The first two will occur this week, with formal testimony before committees in the House and Senate.
But behind the scenes, Powell has become a constant presence on the Hill, a CNBC analysis of his public calendars shows.
Powell packed in 98 personal phone calls and meetings with lawmakers last year — nearly four times as many as his predecessor, Janet Yellen, over the same period during her first year on the job. He slips in phone calls while prepping for the central bank’s policy-setting meetings. He attends early breakfasts and late dinners. His record is six meetings with lawmakers in one day.
“He’s much more direct in answering questions, much more regularly engaged in the Hill conversations with policymakers than what I’ve seen over the last decade and a half that I’ve been involved in Fed oversight,” said Rep. Patrick McHenry, R-N.C., the ranking member on the Financial Services Committee.
A spokeswoman for the Fed declined to comment for this story. But the outreach to Capitol Hill comes as the Fed could use a few friends in Washington. Since Powell began his campaign, the central bank has entered the crosshairs of the Trump White House, and his job has been in jeopardy. Building relationships with Congress can help blunt those attacks — and provide a potential insurance policy if President Donald Trump attempts to get rid of Powell, experts said.
Trump lashed out as the central bank raised its benchmark interest rate four times last year, pulling the reins on the economy just as the president and the Republican-controlled Congress were trying to supercharge growth with their hard-won tax cut during a crucial midterm election year. Trump criticized the rate hikes as “too aggressive” to Reuters and told The Washington Post that the Fed was a bigger problem than China. In that same interview, Trump declared he was “not even a little bit happy” with the choice of Powell for chairman.
By December, Trump reportedly asked his advisors whether he had the authority to fire the Fed chairman. In January, amid mounting public pressure, volatile financial markets and an uncertain global outlook, the central bank paused the stairstep rate hikes. Now, the central bank says, it is practicing patience.
“The Fed certainly can’t count on the administration to have its back,” said Michael Feroli, chief economist at J.P. Morgan. “So it makes sense to find allies on the Hill.”
“The Fed certainly can’t count on the administration to have its back. So it makes sense to find allies on the Hill.”
It’s unclear whether Trump could actually strip Powell of the chairmanship — or whether Congress might have the power to stop it. Powell, for his part, said in January that he would not resign if the president asked him to.
But lawmakers could flex their muscle by refusing to confirm a successor, said Sarah Binder, a senior fellow at the Brookings Institution and co-author of “The Myth of Independence: How Congress Governs the Federal Reserve.” They could also pass new legislation to protect Powell or use the bully pulpit to pressure Trump to back down.
“Legislators could pull a mix of legislative and political levers to try to discourage a president from sacking the Fed chair — or to impose a political cost if he does,” Binder said.
Congress is the boss
In interviews, several lawmakers pointed out that Congress — not the administration — is authorized to oversee the central bank. And though the president nominates the Fed chairman, the position must still be confirmed by the Senate.
In other words, Congress is the boss.
“I think perhaps Chairman Powell knows that his job is going to be easier the more that Congress understands what he’s doing,” said Jeb Hensarling, former chairman of the House Financial Services committee, which oversees the Fed.
Powell’s calendars are released with a two-month lag, so his schedule this year is not public yet. But a review of his first 10 months in office, along with interviews of lawmakers, provide a few clues to his strategy for courting members of Congress. Phone calls are used to check-in or answer basic questions. Meetings almost always occur on their turf, in member offices or at the Capitol. And though he’s happy to answer questions, Powell also lets the politicians do plenty of talking.
His outreach is remarkable in both sheer volume and scope, spanning rank-and-file members and party leaders. There was a half-hour meeting with two-term Rep. Bruce Poliquin, R-Maine, shortly before he was ousted in the midterms. The Fed chair spoke to Senate Majority Leader Mitch McConnell on the phone for 10 minutes in July and Democratic leader Sen. Chuck Schumer for five minutes in August. In September, Powell spent an hour at breakfast with then-House Speaker Paul Ryan.
The Fed is a nonpolitical, independent institution, and lawmakers gave Powell credit for remaining above the partisan fray. Still, the bulk of Powell’s phone calls and meetings so far have been with Republicans, which controlled both chambers of Congress during his first year in office. His calendars show 62 contacts with GOP lawmakers compared to 36 for Democrats.
But his most frequent contact has been with a Democrat, Sen. Sherrod Brown of Ohio. They’ve spoken on the phone five times and had a half-hour meeting in August. In a statement, Brown said that he appreciated Powell’s outreach and commended him for building on the central bank’s shift toward greater transparency.
Lawmakers also said the more proactive approach is an outgrowth of Powell’s familiarity with the inner workings of Washington. He’s not an academic economist, as were the previous two chairs, Yellen and Ben Bernanke. Instead, he served as a top official in the Treasury Department under President George H.W. Bush before heading into the private sector as a partner at the Carlyle Group.
Several lawmakers described Powell as more plainspoken than his predecessors. It’s a trait that may unsettle markets, but it has served him well on Capitol Hill.
“We appreciate your ability to be very accessible to all of us,” Rep. Steve Stivers, R-Ohio, told Powell during a hearing last summer. “I know you were in my office. You’ve been in a lot of our offices. Appreciate that.”