President Donald Trump announces Federal Reserve board member Jerome Powell as his nominee for the next chair of the Federal Reserve in the Rose Garden of the White House in Washington, Nov. 2, 2017.Alex Brandon/AP
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Anger is mounting among Republicans after Federal Reserve Chair Jerome Powell revealed on Sunday that the Justice Department had opened a criminal investigation into him, marking an extraordinary escalation in President Trump’s public efforts to coerce Powell into lowering interest rates.
“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,” Sen. Thom Tillis (R-NC), a member of the Senate Banking Committee, said in a scathing statement on Sunday. “It is now the independence and credibility of the Department of Justice that are in question.”
Tillis then vowed to oppose the confirmation of any nominee for the Fed until the legal matter is “fully resolved.” This includes the upcoming Chair vacancy as Powell is due to step down as Chair in May, though he may continue to serve on the board afterward.
Calling the investigation “nothing more than an attempt at coercion,” Sen. Lisa Murkowski (R-AK) appeared to go a step further, suggesting that it is the Justice Department that should be investigated—not Powell. “If the Department of Justice believes an investigation into Chair Powell is warranted based on project cost overruns—which are not unusual—then Congress needs to investigate the Department of Justice,” she added.
According to Powell, the Justice Department’s investigation relates to testimony he gave before the Senate Banking Committee last June about renovations of the Federal Reserve’s office headquarters in Washington. The costly renovations have prompted the president and his allies to baselessly suggest that fraud may have been committed. As Powell said in his video statement on Sunday, such assertions are widely viewed as a cover for Trump’s campaign to pressure Powell to cut interest rates and lower the cost of federal debt.
“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 said in a rare video message.
Powell, a Republican who was first nominated as a member of the Federal Reserve board by Barack Obama and later promoted to Chair by Trump during his first term, vowed to continue his duty of public service, which “sometimes requires standing firm in the face of threats.”
News of the criminal investigation comes as the Fed’s rate-setting meeting is scheduled to take place later this month, where it is expected to halt its recent rate cuts.
Shortly after Powell’s announcement, Trump claimed in an interview with NBC News on Sunday that he did not have any knowledge of the DOJ’s investigation into the Federal Reserve. The president also denied that the subpoenas had anything to do with pressuring Powell on interest rates.
“What should pressure him is the fact that rates are far too high,” Trump said. “That’s the only pressure he’s got.”
But Trump’s own words leading up to the subpoenas appear to contradict his denials. In fact, it was as recently as December 29 when Trump publicly suggested that he may pursue legal action against Powell about the Federal Reserve building renovations.
“It’s going to end up causing more than $4 billion—$4 billion!” Trump said in a press conference with Israeli Prime Minister Benjamin Netanyahu, insisting it was the “highest price of construction per square foot in the history of the world.”
“He’s just a very incompetent man, but we’re going to probably bring a lawsuit against him,” Trump added.
Rep. Mike Lawler (R-NY), who sits on the House Financial Services Committee, told Politico that “the independence of the Federal Reserve is paramount and I oppose any effort to pressure them into action.”
The Department of Justice did not immediately respond to a request for comment about Powell’s statement or criticism from Republican lawmakers.
The dollar has since dropped, with the price of gold jumping to a record price after news of the DOJ’s investigation broke.
Trump’s attacks on the Federal Reserve go well beyond Powell. In August, the president attempted to fire Lisa Cook, a member of the board, based on unproven allegations of mortgage fraud, as part of the same campaign to pressure the Fed into lowering rates. The Supreme Court temporarily blocked Trump’s move, and it is scheduled to hear arguments next week. The case will decide whether the president has the power to fire a board member of the Federal Reserve for any reason.
