Justice Department opens a criminal investigation of Fed chair (Part 2)
The Washington Post reports:
By Andrew Ackerman and Salvador Rizzo
“The Fed confirmed it received subpoenas related to Senate testimony of the Federal Reserve’s Jerome Powell about renovations to the headquarters.
The Justice Department has opened a criminal investigation of Federal Reserve Board Chair Jerome H. Powell, the central bank said Sunday, tied to the renovation of the Fed’s headquarters along the National Mall.
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Powell accused the Justice Department of using the threat of criminal prosecution to pressure the central bank to lower interest rates, describing newly issued grand jury subpoenas as an unprecedented challenge to the Fed’s independence.
“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President,” Powell said in a video and statement posted to the central bank’s website Sunday.
A Justice Department official familiar with the effort confirmed the inquiry into the Federal Reserve, speaking on the condition of anonymity because of the ongoing investigation.
Tim Lauer, a spokesman for the top federal prosecutor in D.C., Jeanine Pirro, said: “We do not comment on ongoing investigations.”
President Donald Trump, who originally nominated Powell to serve as Fed chair during his first term in 2017, has spent much of his second term attacking and threatening to fire the Fed chief for not slashing interest rates to juice the economy. The Fed has moved slowly to lower rates, as it weighs a weakening labor market with elevated inflation that has made its job more difficult.
Powell said the threat of prosecution would not interfere with his service as Fed chair. His term as chair ends in May, and Trump is expected to soon announce a decision on his successor.
Sen. Thom Tillis (R-North Carolina) took to X to attack the inquiry. “If there were any remaining doubt whether advisers within the Trump Administration are actively pushing to end the independence of the Federal Reserve, there should now be none,” he said. “It is now the independence and credibility of the Department of Justice that are in question.”
Tillis added that he would oppose the confirmation of any nominee for the Fed, including the upcoming vacancy for chair, “until this legal matter is fully resolved.”
Powell’s video was notable for its forceful pushback after years of generally avoiding commenting at all on Trump’s repeated attacks on the central bank. Specifically, he said the Justice Department is seeking information about his June testimony before a Senate panel on steps the central bank took to tone down a renovation of its Washington headquarters. He described the focus on the project and his testimony as “pretexts.”
Administration officials in the summer alleged that the Fed chair either lied to Congress about the multiyear renovation or grossly mismanaged the project. But the criticism ebbed after Trump made a rare visit to the Fed’s construction site in July — something a sitting president hadn’t done in roughly 20 years. During the visit, Trump refrained from criticizing the Fed chair, telling reporters he didn’t want to make the meeting personal. He later said he wouldn’t fire Powell and signaled he wanted the project to proceed.
The Justice Department has targeted several of Trump’s perceived political foes with criminal investigations or charges since last year, including New York Attorney General Letitia James (D), Sen. Adam Schiff (D-California) and former FBI director James B. Comey, who was investigated, like Powell, for making allegedly false statements to Congress.
But the efforts to convict Trump’s foes have been largely unsuccessful. A federal judge last year disqualified the prosecutor Trump appointed in Virginia with directions to charge Comey and James, and also threw out their indictments. Grand juries then repeatedly refused to reindict James.
Past administrations have also pressured the central bank, whose independence rests both on federal law and on norms that most recent presidents, wary of rattling financial markets, have been reluctant to test. President Richard M. Nixon pushed then-Fed Chair Arthur Burns to cut rates before the 1972 election. Top aides to President George H.W. Bush publicly pushed Fed Chair Alan Greenspan to cut rates before the 1992 election.
Even so, Trump has taken unusual steps to attack central bank independence, openly mused about firing the Fed chief, repeatedly demanded sharp rate cuts in public and is testing whether he can remove another sitting member of the Fed’s board, Lisa Cook, over unproven allegations of mortgage fraud.
The Supreme Court, which has allowed Cook to remain at the Fed while it considers the matter, is set to hear the case this month. She denies wrongdoing.
The court’s ruling could remake the Fed, which Congress designed to be insulated from political pressure. That insulation protects interest rate decisions from the president and other elected officials, who often favor lower rates to boost near-term growth even at the risk of longer-term inflation.
Over the past year, Trump has repeatedly flirted with firing Powell. But he ultimately relented after advisers argued that attempting to fire the Fed chief would rattle markets in a way that wouldn’t be worth the effort.”
By Andrew Ackerman and Salvador Rizzo
“The Fed confirmed it received subpoenas related to Senate testimony of the Federal Reserve’s Jerome Powell about renovations to the headquarters.
The Justice Department has opened a criminal investigation of Federal Reserve Board Chair Jerome H. Powell, the central bank said Sunday, tied to the renovation of the Fed’s headquarters along the National Mall.
Get a curated selection of 10 of our best stories in your inbox every weekend.
Powell accused the Justice Department of using the threat of criminal prosecution to pressure the central bank to lower interest rates, describing newly issued grand jury subpoenas as an unprecedented challenge to the Fed’s independence.
“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President,” Powell said in a video and statement posted to the central bank’s website Sunday.
A Justice Department official familiar with the effort confirmed the inquiry into the Federal Reserve, speaking on the condition of anonymity because of the ongoing investigation.
Tim Lauer, a spokesman for the top federal prosecutor in D.C., Jeanine Pirro, said: “We do not comment on ongoing investigations.”
President Donald Trump, who originally nominated Powell to serve as Fed chair during his first term in 2017, has spent much of his second term attacking and threatening to fire the Fed chief for not slashing interest rates to juice the economy. The Fed has moved slowly to lower rates, as it weighs a weakening labor market with elevated inflation that has made its job more difficult.
Powell said the threat of prosecution would not interfere with his service as Fed chair. His term as chair ends in May, and Trump is expected to soon announce a decision on his successor.
Sen. Thom Tillis (R-North Carolina) took to X to attack the inquiry. “If there were any remaining doubt whether advisers within the Trump Administration are actively pushing to end the independence of the Federal Reserve, there should now be none,” he said. “It is now the independence and credibility of the Department of Justice that are in question.”
Tillis added that he would oppose the confirmation of any nominee for the Fed, including the upcoming vacancy for chair, “until this legal matter is fully resolved.”
Powell’s video was notable for its forceful pushback after years of generally avoiding commenting at all on Trump’s repeated attacks on the central bank. Specifically, he said the Justice Department is seeking information about his June testimony before a Senate panel on steps the central bank took to tone down a renovation of its Washington headquarters. He described the focus on the project and his testimony as “pretexts.”
Administration officials in the summer alleged that the Fed chair either lied to Congress about the multiyear renovation or grossly mismanaged the project. But the criticism ebbed after Trump made a rare visit to the Fed’s construction site in July — something a sitting president hadn’t done in roughly 20 years. During the visit, Trump refrained from criticizing the Fed chair, telling reporters he didn’t want to make the meeting personal. He later said he wouldn’t fire Powell and signaled he wanted the project to proceed.
The Justice Department has targeted several of Trump’s perceived political foes with criminal investigations or charges since last year, including New York Attorney General Letitia James (D), Sen. Adam Schiff (D-California) and former FBI director James B. Comey, who was investigated, like Powell, for making allegedly false statements to Congress.
But the efforts to convict Trump’s foes have been largely unsuccessful. A federal judge last year disqualified the prosecutor Trump appointed in Virginia with directions to charge Comey and James, and also threw out their indictments. Grand juries then repeatedly refused to reindict James.
Past administrations have also pressured the central bank, whose independence rests both on federal law and on norms that most recent presidents, wary of rattling financial markets, have been reluctant to test. President Richard M. Nixon pushed then-Fed Chair Arthur Burns to cut rates before the 1972 election. Top aides to President George H.W. Bush publicly pushed Fed Chair Alan Greenspan to cut rates before the 1992 election.
Even so, Trump has taken unusual steps to attack central bank independence, openly mused about firing the Fed chief, repeatedly demanded sharp rate cuts in public and is testing whether he can remove another sitting member of the Fed’s board, Lisa Cook, over unproven allegations of mortgage fraud.
The Supreme Court, which has allowed Cook to remain at the Fed while it considers the matter, is set to hear the case this month. She denies wrongdoing.
The court’s ruling could remake the Fed, which Congress designed to be insulated from political pressure. That insulation protects interest rate decisions from the president and other elected officials, who often favor lower rates to boost near-term growth even at the risk of longer-term inflation.
Over the past year, Trump has repeatedly flirted with firing Powell. But he ultimately relented after advisers argued that attempting to fire the Fed chief would rattle markets in a way that wouldn’t be worth the effort.”
