He said eight years out of the recession “is more than enough time to recover fully,” according to the letter. “However, in response to the financial crisis, the Dodd-Frank Wall Street Reform and Consumer Protection Act rewarded government bureaucrats, such as the ones at the Federal Reserve, who were, arguably, most responsible for the financial crisis with expansive new regulatory powers.”
It's expected that Trump will make a choice, and the apparent front-runners for the job are Jerome Powell, a member of the Federal Reserve Board of Governors, and Stanford economics professor John Taylor. A recent Reuters poll of economists said Powell is likely to be Trump's choice, but Yellen should be his pick.
Davidson said on Friday that under Yellen’s leadership, the Federal Reserve has not succeeded in growing the economy to its fullest potential.
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“We’ve had a recovery, but that recovery has been much more modest than the ones we’ve had in the past,” Davidson said to the Journal-News.
According to CNBC, the Dow Jones is up 30 percent since Trump's election, and the index is up 45 percent since Yellen became the Federal Reserve chair in February 2014.
He said the policy of the Fed had pushed for that helped with small growth versus larger growth has been in the business sector. ‘They basically were treating lines of credit as if they were fully utilized,” he said.
Davidson said the Federal Reserve should “let banks run banks” and it “should only be really worried about systemic risks.” There are other agencies watching and regulating the banks, he said.
“Congress’ decision to grant virtually unlimited regulatory authority to a single federal agency has had profound consequences for the financial system and the broader U.S. economy,” according to the letter. “Since then, the Federal Reserve has been engaged in a radical monetary policy experiment, amassing a $4.2 trillion portfolio of assets, intervening to prop up select credit markets, and keeping interest rates near zero.”
Davidson said there will soon be a piece of legislation out of the Subcommittee of Monetary Policy and Trade to be introduced to Congress which will help the Fed “focus on the role of financial policy.”