Powell is not the best choice for Fed chair: Bill Gross

By Nick Giampia
Published November 02, 2017
FOXBusiness

On Thursday, President Trump nominated Jerome Powell to replace Janet Yellen as the next Federal Reserve chairman.

Janus Henderson Portfolio Manager Bill Gross on Thursday disagreed with President Trump’s decision to nominate Powell as head of the central bank and discussed who he would have preferred.

Many believe that Powell fits Trump’s economic agenda because he is expected to help ease banking regulations.

“I think though that he is soft on regulation and that pleases the market, but it doesn’t please me necessarily, and in addition I think he lacks the proper appreciation for our credit-based financial system,” Gross told FOX Business' Trish Regan on "The Intelligence Report."

Powell worked at the private equity firm Carlyle Group in 1997, before being appointed as a member of the Fed’s board of governors in 2012 by former President Barack Obama.

Gross believes that Powell’s previous experience working in private equity will work against him when running the Fed.

“I really don’t think as an investor in private equity that he had a sense of credit creation, credit destruction [and] the shadow banking system. I think many of his speeches have been devoid of some of that intellectual discussion, and I think it’s important going forward should we see the potential for another Lehman moment that we have a Fed chairman that knows what’s going on. I’m not so sure at the moment that he does,” he said.

Gross gave suggestions as to who he would have nominated as Fed chair.

“I would have preferred perhaps Paul McCulley from Pimco who forecasted the debacle and talked about the Minsky Moment. Otherwise I would have preferred Neel Kashkari, who’s a legitimate Fed governor and has displayed some pretty instructive ideas going forward,” he said.

Regardless of his criticism for Yellen, Gross said that he would prefer if she stayed as Fed chair.

“I’m not perfectly content with her, but she’s done a decent job. She’s a little model oriented or too model oriented, and I think you need to be more subjective these days in terms of structural ideas that can’t necessarily be modeled like Janet Yellen and others have done at the Fed,” he said.

Though nominated by the president, the Senate will have the final say in whether Powell will be confirmed.