US Justice Department Opens Criminal Probe into Fed Chair Jerome Powell
In a startling development, the U.S. Justice Department has initiated a criminal investigation into Federal Reserve Chairman Jerome Powell. In a video released on Sunday, Powell revealed that the agency served subpoenas and signaled a potential criminal indictment stemming from his testimony before a Senate committee regarding renovations to Federal Reserve buildings. He labeled the investigation as unprecedented and suggested that it may be linked to his refusal to lower interest rates amid persistent pressure from former President Donald Trump.
Context of the Investigation
– Powell stated that his disagreements with Trump over interest rate policy triggered this scrutiny. He emphasized the importance of maintaining the Federal Reserve’s independence in setting monetary policy, free from political interference.
– This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions, or whether instead monetary policy will be directed by political pressure or intimidation, Powell asserted.
– He expressed deep respect for the rule of law, highlighting that no one, including the Fed chair, is above it. Powell indicated that this extraordinary action should be viewed in the broader context of the administration’s persistent threats and pressure on the Federal Reserve.
Reactions to the Probe
– In an interview with NBC News, Trump claimed ignorance about the Justice Department’s investigation but criticized Powell’s performance at the Fed. 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 remarked.
– This investigation appears to escalate the ongoing conflict between Trump and Powell, who was appointed to his position by Trump in 2017. Trump has frequently expressed dissatisfaction with Powell’s reluctance to accelerate interest rate cuts.
Political Ramifications
– North Carolina Senator Thom Tillis, a Republican and member of the Senate Banking Committee, voiced his intention to oppose any nomination from Trump to replace Powell until the legal issues are resolved. He stated, 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.
– Senator Elizabeth Warren, a Democrat, echoed concerns that Trump’s aim is to remove Powell and replace him with someone who would submit to his influence. This committee and the Senate should not move forward with any Trump nominee for the Fed, including Fed Chair, she insisted.
Oversight of the Investigation
The investigation into Powell will be handled by the U.S. Attorney’s Office for the District of Columbia, as first reported by The New York Times. This legal scrutiny seems to resonate with similar challenges faced by other political adversaries of Trump, raising questions about the independence of the Department of Justice.
Trump has previously sought to dismiss figures such as Lisa Cook, a Fed board governor, over alleged discrepancies, but those actions faced legal obstacles. Moreover, past criminal charges against Trump’s adversaries have been dismissed, leading to allegations of politically motivated pursuits.
In summary, the criminal probe into Jerome Powell not only impacts his tenure at the Federal Reserve but also highlights significant concerns regarding political influence in economic policy-making. As this situation unfolds, the implications for the Federal Reserve’s autonomy and credibility remain critical.