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Donald Trump’s move to tighten his grip on independent US watchdogs is “a big, big mistake” that risks eroding trust in the world’s biggest economy, Europe’s largest asset manager has warned.
The Trump administration has pushed for greater control of regulators, signing an executive order late on Tuesday that “reins in independent agencies” and requires them to submit draft regulations for review.
Federal agencies must “consult with the White House on their priorities and strategic plans”, and the president will set “performance standards” for them, according to a White House statement.
Vincent Mortier, chief investment officer of Amundi, which manages €2.2tn in assets, told the Financial Times that “at the end of the day, what is working in the US is the checks and balances”.
“If everything is put under [executive power], with an agenda for deregulation, crypto, digital push — and many conflicts of interest everywhere, it is the start of the end of how . . . democracy is working. It’s quite dangerous, really.”
Mortier said the dollar and the proper functioning of US markets “is relying on one thing, which is trust”.
“The biggest threat is whenever people, in particular big foreign investors, start to question the trust,” he added.
“I don’t think that’s yet there, but there are more and more things that are done that could start to erode the trust. And at the end of the day, the US dollar status is also linked to this — trust in the US system, in the Fed, in the US economy.
“If you think checks and balances are weaker, conflicts of interest are everywhere, fake news is developing and the reliability of the policy mix can be questioned . . . Finally, you can start to lose a little bit of trust.”
While conflicts of interest have always existed, he added: “Now we’ve reached another level.”
Some critics have said Trump’s executive order is illegal and will be challenged in the courts.
The White House has exempted the Federal Reserve’s monetary policy functions from its executive order, although some market participants have questioned the permanence of that decision and the central bank’s supervisory role has still been targeted.
While Trump has frequently expressed his desire to bring interest rates down, Treasury secretary Scott Bessent has said the administration is focused on 10-year US government bond yields, a benchmark rate for trillions of dollars in assets around the world.
The benchmark 10-year yield climbed to more than 4.8 per cent in mid-January, its highest level in 14 months, but has slipped lower in recent weeks as investors oscillate between concerns about inflation and expectations of slower growth under the new administration.
Mortier said the Trump administration “totally understood that if they were to revoke the independence of the Fed, it would have had some very, very, very adverse consequences — in particular on the 10-year”.
“Short term, there is no need to do it,” he added. “It’s a kind of red line in the short term, where the negative impact would have been much greater than any positive impact.
“I believe that now for the next months and years, they will try to pressure the Fed — and they’ve started actually.”
Mortier said that while he did not believe Fed chair Jay Powell would succumb to such pressure, there was a question over what would happen when his term ended in May 2026.
“Who will replace Powell?”
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