Powell steps down but continues to sit on the Federal Reserve Board, “breaking 75 years of Fed tradition.” The Senate Banking Chair fires back: a massive mistake—acting impulsively and just wanting to provoke Trump.

Federal Reserve Chair Powell announces he will step down on May 15 but will continue serving as a Fed board member, breaking a 75-year convention, sparking rare public criticism from Senate Banking Committee Chairman Tim Scott, who calls this a “major mistake” and nearly a “provocation of Trump.”
(Background: Powell once said, “Unless I die,” he would never resign early — the last bastion of Fed independence)
(Additional context: Who will influence the world’s most important interest rate? Benczé “seizes power” from Powell)

Table of Contents

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• Scott: The 75-year tradition ends with Powell
• Powell defends himself: Won’t leave until investigations are complete
• The last time a chairman stayed on was in 1948
• Warsh is about to take over, entering the era of dual leadership at the Fed

On May 6, at the Milken Institute Global Conference in Los Angeles, Senate Banking Committee Chairman Tim Scott publicly called out Powell, with an unusually blunt tone: “This is a significant mistake.” The trigger was Powell’s announcement that he would step down as Fed Chair on May 15 but would not leave — choosing to remain on the Federal Reserve Board of Governors, staying in the institution he once led, watching his successor take over the big picture.

Scott: The 75-year convention ends with Powell

Scott was candid at the Milken Conference. He stated outright that the U.S. has an unwritten rule of 75 years: “Every time you get a new chairman, the former chairman leaves.”
This rule has never been broken — until Powell.

Scott’s concern is not just about tradition being broken but also about practical policy risks. He said, “What you don’t want are these philosophies in conflict within the institution.”
In other words, Powell staying on after the appointment of his successor, Kevin Warsh, leaves a “shadow voice” — an unnecessary complex variable for the overall operation of the Federal Reserve.

Scott further directly accused Powell of “a bit of a provocation to the president.”
This is a rare public criticism from a Republican Senate Banking Committee chairman directed at the Fed leadership.
A Fed spokesperson declined to comment on this.

Powell defends himself: Won’t leave until investigations are over

To understand why Powell refuses to leave, we must go back to the press conference after the April 29 FOMC decision. Powell explicitly said:

I will not leave the Board until this investigation is transparently and conclusively resolved.

The investigation he refers to is the legal action initiated by the Trump administration against the Fed’s headquarters renovation project — which he described as an “unprecedented” attack on central bank independence. Powell emphasized:

The events of the past three months have left me with no choice but to stay at least until I see how this unfolds.

It’s worth noting that Powell’s term as Chair ends on May 15, but his Fed Governor seat actually extends until January 2028, legally giving him the option to remain.
He also promised to stay low-profile: “There’s only ever one chair,” and after Warsh takes office, he will not step in.

The last time a chairman stayed on was in 1948

If Powell truly remains on the Fed Board, it will be the first time in 78 years.
The last occurrence was in 1948 — when President Truman asked Marriner Eccles to continue serving after stepping down as Fed Chair, and Eccles stayed on for several more years.

The power dynamics and political environment of that era are vastly different from today, but this history is now being revisited, making it particularly notable.
From 1948 to 2026, no one has crossed this line.
Powell’s choice to break it, staying during a highly sensitive political moment, carries a cost — not only from Scott’s criticism but also as a test of the trust in the central bank’s external credibility.

Warsh is about to take over, entering the era of dual leadership at the Fed

The confirmation process for the successor is accelerating.
Kevin Warsh, nominated by Trump, passed the Senate Banking Committee review in early May with a 13-11 vote, and is expected to be voted on by the full Senate as soon as next week.

Once confirmed, the Fed will enter a rare “dual leadership” situation — Warsh as Chair, Powell as a Governor, both sitting at the FOMC decision table.
Powell says he will step back from the front lines, but how long this promise lasts remains uncertain in the eyes of the public.

The phrase Scott said at the Milken Conference perhaps best captures the current tension:
“This is not good for the country, it’s not good for the Fed.”
The next chapter of monetary policy, before Warsh officially takes the chair, is already filled with political noise.

This article is based on reports from Golden Finance and multiple public sources, compiled and reported by Dongqu Dongqu.