It’s Federal Reserve Chairman Jerome Powell vs US President Donald Trump after the Justice Department opened a criminal investigation over the central bank’s $2.5 billion renovation of its Washington, DC, headquarters.
While Powell has linked the investigation to the Trump administration’s “pressure” on the Fed to lower interest rates, the Republican has washed his hands of it.
Jerome Powell’s statement
Jerome Powell said on Sunday that the Justice Department was threatening the Federal Reserve with possible criminal indictment related to his testimony before the Senate in June regarding the renovation of the agency’s office buildings.
“No one, certainly not the chair of the Federal Reserve, is above the law. But this unprecedented action should be seen in the broader context of the administration’s threats and ongoing pressure,” Powell said.
As the Justice Department move comes after a yearlong campaign by the Trump administration to pressure Powell to lower interest rates, Powell said that he believed it was part of that effort.
“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,” the Fed chairman said.
Donald Trump denies links
President Donald Trump denied on Sunday having any knowledge of the Justice Department’s investigation into the Federal Reserve, following the agency’s subpoena of the central bank on Friday.
“I don’t know anything about it, but he’s certainly not very good at the Fed, and he’s not very good at building buildings,” Trump said of Federal Reserve Chair Jerome Powell in a brief interview with NBC News Sunday night.
Trump told NBC News that the Justice Department subpoenas have nothing to do with interest rates.
“No. I wouldn’t even think of doing it that way. What should pressure him is the fact that rates are far too high. That’s the only pressure he’s got,” Trump said.
“He’s hurt a lot of people. I think the public is pressuring him,” he added.
The backlash
The Justice Department’s investigation met with swift backlash from within the US Congress.
Republican Senator Thom Tillis of North Carolina, who is a member of the Banking Committee, said he will not vote to confirm any of Trump’s nominees, including for the position of chair, for the Federal Reserve.
“I will oppose the confirmation of any nominee for the Fed, including the upcoming Fed Chair vacancy, until this legal matter is fully resolved. 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 was quoted by NBC News as saying.
Democratic Senator Elizabeth Warren of Massachusetts, also a member of the Banking Committee, said in a statement that Trump is “abusing the authorities of the Department of Justice like a wannabe dictator so the Fed serves his interests, along with his billionaire friends.”
“This Committee and the Senate should not move forward with any Trump nominee for the Fed, including Fed Chair,” she added.
Powell’s term as chairman ends in May, but his position as a member of the Federal Reserve’s Board of Governors doesn’t expire until 2028.
What did the White House and Justice Department say?
The White House declined to comment on the Jerome Powell issue, referring all inquiries to the Department of Justice.
A spokesperson for the Justice Department said they could not comment on any specific case.
“The attorney general has instructed her US attorneys to prioritise investigating any abuse of taxpayer dollars,” the spokesperson said.
