The possibility that President Trump could replace Federal Reserve Chair Jerome Powell with Treasury Secretary Scott Bessent is spinning heads from Washington to Wall Street and beyond.

Senators on both sides of the aisle have thrown cold water on the idea despite rising tension between Trump and Powell over interest rates, and the precedent-breaking move could also rock markets and face legal challenges.

Here’s a look at the political and financial feasibility of Bessent doubling down with two of the most important government roles in finance.

First of all, is it legally possible?

Legal experts say there’s no law preventing the Treasury secretary from also serving as the chair of the Federal Reserve.

“There’s no prohibition in the Federal Reserve Act that says a member of the board of governors, or the chair, can’t also be the Secretary of the Treasury,” Sarah Binder, a senior fellow at the Brookings Institution, told The Hill.

Treasury secretaries used to sit on the board of the Fed prior to 1935.

However, having a dual Fed-Treasury chief would fly in the face of the doctrine of central bank independence that has gotten stronger over the years.

Specifically, it would undermine a semi-formal 1951 agreement between the two entities that separated the duties of public debt issuance from interest-rate setting.

The nearly 75-year accord made it so that the Treasury Department would manage bonds and the debt, and the Fed would handle interest rates and the money supply. This was to protect against the temptation of printing money to pay for the debt.

“The announcement [of the agreement referred] to a ‘full accord with respect to debt-management and monetary policies,’” Columbia Law professor Lev Menand and New York Fed policy adviser Joshua Younger wrote in the Columbia Law Review in 2023.

The separation of these duties is still passionately supported by many.

“You don’t want the fiscal authority making decisions about interest rates,” Binder told The Hill.

Would markets tolerate it?

© The Hill