\n
![](\"https:\/\/fortune.com\/img-assets\/wp-content\/uploads\/2024\/08\/GettyImages-2165917694-e1723390136266.jpg?w=2048\")
<\/p>\n [ad_1]
\n<\/p>\n
Former President Donald Trump got Wall Street\u2019s attention by asserting that he should have more influence<\/a> over interest rates, which are set by the Federal Reserve.<\/p>\n Rehashing a major grievance during his time as president<\/a>, he criticized his own pick for Fed chairman, Jerome Powell, during a Thursday press conference and said he could do Powell\u2019s job better.<\/p>\n \u201cI feel the president should have at least say in there,\u201d Trump said. \u201cIn my case, I made a lot of money, I was very successful, and I think I have a better instinct than, in many cases, people that would be on the Federal Reserve, or the chairman.\u201d<\/p>\n Trump\u2019s comments were brushed off by some in the financial world, but other major players were quick to condemn the idea that the Fed should be less independent.\u00a0<\/p>\n Former Treasury Secretary Larry Summers<\/a> was among the critics who said he was \u201cappalled at how bad an idea it was.\u201d The president has other issues to worry about and is not as close to the economy as the leaders of the Fed are, he added.<\/p>\n Meanwhile, Trump\u2019s opponent, Vice President Kamala Harris, said Saturday that she wouldn\u2019t interfere with the Fed<\/a> if she is elected president.<\/p>\n The Fed\u2019s history with presidential administrations<\/strong><\/p>\n When the Fed was founded by the passing of the Federal Reserve Act in 1913, it wasn\u2019t very independent. The act made the Treasury Secretary and the Comptroller of the Currency ex officio members of the governing board, and the Treasury Secretary presided over all the Fed meetings at the time, wrote<\/a> Stephen Slivinski, a former senior editor in the research division of the Federal Reserve Bank of Richmond. <\/p>\n Even after the Treasury chief and the Comptroller of the Currency were removed from the board by a 1935 amendment to the Federal Reserve Act, Congress and the executive branch either mandated or exerted strong influence over the Fed\u2019s activities for decades, according to Slivinski.<\/p>\n It wasn\u2019t until an agreement<\/a> between the Treasury Department and the Fed in 1951 that the central bank gained some independence. But that year, President Harry Truman also pressured then-Fed Chairman Thomas McCabe to resign<\/a>, although Truman didn\u2019t technically remove him.<\/p>\n The Fed faced another test from President Richard Nixon, who pressured then-Fed Chairman Arthur Burns to ease up on monetary policy to boost the economy ahead of the 1972 election.<\/p>\n \u201cI respect his independence. However, I hope that, independently, he will conclude that my views are the ones that should be followed,\u201d Nixon said<\/a> of Burns, as revealed by the infamous Nixon Tapes that led to his resignation.<\/p>\n In part because of Nixon\u2019s pressure, inflation skyrocketed during the 1970\u2019s while economic growth slowed to create \u201cstagflation\u201d<\/a> that lasted well after Nixon resigned in 1974. The oil shock in 1973 also sent gas prices soaring and stoked more inflation. These economic headwinds were only halted by the drastic interest rate hikes of Burns\u2019 successor Paul Volcker.<\/p>\n\n