Powell calls DOJ criminal investigation an attack on Fed independence. “Public service sometimes requires remaining firm in the face of threats”
Federal Reserve Chairman Jerome Powell criticized the Trump administration for undermining the central bank’s independence, saying a criminal investigation was due to the Fed’s refusal to cut rates earlier this year as President Donald Trump had requested.
He said in a statement Sunday that the Justice Department subpoenaed the Fed before a grand jury, threatening it with a criminal indictment for its testimony before the Senate last June regarding headquarters renovations, which resulted in cost overruns.
Powell, who is generally cautious in his public remarks, made clear that the investigation was political in nature and had nothing to do with the Fed renovations or his testimony, calling them “pretexts.”
“The threat of criminal prosecution 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 president’s preferences,” he wrote.
“It’s a question of whether the Fed will be able to continue setting interest rates based on evidence and economic conditions, or whether monetary policy will instead be driven by political pressure or intimidation. »
Powell added that he served under both Republican and Democratic presidents “without political fear or favor,” while focusing on the Fed’s dual mandate: price stability and maximum employment.
“Public service sometimes requires remaining firm in the face of threats,” he said. “I will continue to do the job the Senate has confirmed me to do, with integrity and a commitment to serving the American people.”
The statement came as The New York Times reported that the U.S. Attorney’s Office for the District of Columbia had opened a criminal investigation into Powell and whether he lied to the Senate Banking Committee about the scale of the renovation project, which totaled $2.5 billion.
Jeanine Pirro, a longtime Trump ally and head of federal prosecutors in Washington, has endorsed the investigation, sources told the Times.
The subpoena marks Trump’s latest attack on Powell and the Fed, which he has harangued for months for not lowering interest rates sooner. And when he began easing rates in September, Trump said he would have to cut rates further.
In addition to the verbal attacks, Trump considered firing Powell and threatened to sue him over renovation costs. Trump is also still trying to impeach Gov. Lisa Cook after announcing her firing last year for alleged mortgage fraud. She denied the accusation and contested her dismissal. The case is now before the Supreme Court.
Meanwhile, Powell’s term as Fed chair expires in May and Trump has said he already has someone in mind to replace him. The leading candidates are Gov. Christopher Waller, National Economic Council Director Kevin Hassett and former Gov. Kevin Warsh.
Powell could continue serving as Fed governor through 2028, even though previous Fed chairs typically left the board early at the end of their terms.
Observers expected Powell to follow that tradition, especially after the Fed reappointed regional chairs, easing fears that Trump would purge them to stack the Federal Open Market Committee with his loyalists.
But Powell’s forceful statement against the Justice Department’s investigation makes that less likely.
This story was originally featured on Fortune.com
