Not content with launching a dizzying cascade of international conflicts, Trump just lobbed a nuke at the Fed.
While Trump’s vendetta against the Fed’s Lisa Cook set for a January showdown before the Supreme Court, the Trump admin dramatically raised the stakes on Sunday when the NYT first reported, and minutes later Fed Chair Jerome Powell confirmed that the US central bank had been served grand jury subpoenas from the Justice Department threatening a criminal indictment, in what Bloomberg said was a dramatic escalation of the Trump administration’s attacks on the Fed.
As the NYT first reported, the US attorney’s office in the District of Columbia has opened a criminal investigation into Powell over the central bank’s renovation of its Washington headquarters and whether the Fed Chair lied to Congress about the scope of the project. The inquiry, which includes an analysis of Powell’s public statements and an examination of spending records, was approved in November by Jeanine Pirro, a longtime ally of President Trump who was appointed to run the office last year, the NYT sources said.
Attorney General Pam Bondi has directed US attorneys offices to look into cases of potential taxpayer abuse, said one of the NYT sources. In comments broadcast by NBC, Trump said that the DOJ’s Fed subpoenas “nothing to do with interest rates” and denied any involvement in the legal matter.
The investigation escalates Trump’s long-running feud with Powell, whom the president has continually attacked for resisting his demands to slash interest rates significantly (and, in retrospect, Trump was right as the Fed did in fact cut rates at its last 3 meetings having belatedly observed the dramatic deterioration in the labor market without an offsetting surge in inflation). The president has threatened to fire the Fed chair – whom he nominated for the position in 2017 – and raised the prospect of a lawsuit against him related to the $2.5 billion renovation, citing “incompetence.”
In a striking public response to the NYT report, Powell – who has historically ignored public commentary on Trump’s public assaults – issued a forceful written and video statement released Sunday evening using the Federal Reserve’s official account on X, in which he said the action was related to his June congressional testimony on ongoing renovations of the Fed’s headquarters. But he said “this unprecedented action should be seen in the broader context of the administration’s threats and ongoing pressure.” The Fed Chair then continued:
“This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings. It is not about Congress’s oversight role; the Fed through testimony and other public disclosures made every effort to keep Congress informed about the renovation project. Those are pretexts.”
“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. 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.”
“I have deep respect for the rule of law and for accountability in our democracy. 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,”
“Public service sometimes requires standing firm in the face of threats. I will continue to do the job the Senate confirmed me to do with integrity and a commitment to serving the American people.”
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