The Trump-Kimmel feud has scary implications for the Federal Reserve

Trump's FCC chair, who critics liken to a mob boss, may be just the kind of guy Trump wants to run the world's most important financial institution.

President Trump has de facto control of the Federal Communications Commission, the agency that regulates broadcast networks such as ABC and its parent, Disney. The FCC Chairman, Brendan Carr, is a Trump appointee who has shown he’s willing to do what Trump wants before Trump may even know himself.

That’s the same sort of leader Trump wants at the Federal Reserve, where chair Jerome Powell has been fending off near-daily pressure to slash interest rates since Trump took office in January. Trump clearly wants the Fed to operate as a political arm of the White House, and Carr’s management of the FCC is a frightening template for what Trump may try to do with the Fed when Powell’s term expires next year.

It was Carr who, on September 17, urged ABC to suspend comedian Jimmy Kimmel’s show, just hours before ABC decided to do just that. Kimmel caused a kerfuffle two days earlier by saying on-air that Trump and the “MAGA gang” were trying to exploit the murder of conservative activist Charlie Kirk, a critique some Kirk supporters found offensive.

Amid calls for ABC to fire or cancel Kimmel, Carr’s message to ABC was, “we can do this the easy way or the hard way.” That sounded like a threat to use the FCC’s power over broadcast networks to punish ABC if they kept Kimmel on air. Carr also called on ABC affiliates to “step up” and put pressure on ABC, a very unusual case of a senior regulator who’s supposed to be impartial allying himself with one side of a business partnership, against the other.

Disney benched Kimmel for six days before unexpectedly putting him back on the air on September 23. Kimmel trolled Trump and Carr in a monologue that got four times the usual viewership. Trump bashed Kimmel back on social media and posted, “I think we’re going to test ABC out on this.” Carr has his marching orders: Use the power of the FCC to harass Disney and ABC.

Could this sort of bullying ever happen at the Federal Reserve? Some analysts say, get ready for it. “There’s a compare/contrast between FCC and the Fed/Trump situation,” Terry Haines, founder of Pangaea Policy, advised clients in a September 23 analysis. “If markets want to know what a Fed servile to POTUS might look like, the FCC today is a living example.”

It’s obvious that Trump wants to control the Fed the way he does the FCC, where Carr rules a commission with one other Republican member, a single Democrat, and two vacancies. Trump has tried to force Powell out of the Fed before his term expires, and he wants to fire Fed governor Lisa Cook over what may be bogus claims of mortgage fraud. Trump has already appointed one loyalist to the Fed’s policymaking committee and may try to appoint more next year. So the intent is clearly there.

What would a politicized Fed do for Trump? It would probably disregard the Fed’s obligation to keep inflation low and cut interest rates aggressively, which can push prices higher by making borrowing cheap and boosting spending. The Fed can also “print money” by increasing the money supply, which might juice the economy for a while and boost Trump’s standing. These are powerful tools that can affect the economy more than just about anything any government agency can do.

The Fed also regulates banks, and in manipulative hands it could help steer loans to favored parties, finance deals that serve political rather than business interests, and punish institutions that criticize the president or don’t do his bidding. In August, for instance, Trump said Goldman Sachs should hire a new economist after the bank published research forecasting that American consumers would bear most of the cost of the Trump tariffs (as virtually every other Wall Street bank expects). The Fed could certainly make trouble for Goldman if it had no scruples about abusing its power.

It’s not a given that the Federal Reserve will become a Trump tool, the way the FCC has. The Supreme Court may treat the Fed differently from other agencies and go further to safeguard its independence in the Cook case and others it may end up hearing. That would be an important source of protection for the Fed and every institution it regulates.

The FCC’s muscle-flexing could also backfire. Republican Sen. Ted Cruz, who chairs the committee overseeing the FCC, seems suddenly enraged by Carr’s freelancing and has compared him to a mob boss. A few other Capitol Hill Republicans have chimed in, a rare instance of Congressional Republicans publicly criticizing Trump’s modus operandi.

“Carr’s standing with Trump might be up for the moment, but it’s way down in Congress and likely stays there,” Haines wrote. Carr’s job may be safe, but the senators who confirm Trump nominees may not want a carbon copy at the Federal Reserve.