What happened
Federal Reserve Chair Jerome Powell on Sunday night disclosed that the Justice Department was “threatening a criminal indictment” against him over testimony he gave to the Senate last summer about an over-budget renovation of the Federal Reserve’s headquarters. Powell called the “unprecedented” criminal investigation part of President Donald Trump’s “threats and ongoing pressure” on him to slash interest rates, and many analysts agreed. Sen. Thom Tillis (R-N.C.) said he would use his vote on the Banking Committee to oppose any Trump nominees to the central bank until “this legal matter is fully resolved.”
Who said what
“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,” Powell said in a video message. His statement was “notable for its forceful pushback after years of generally avoiding commenting at all on Trump’s repeated attacks on the central bank,” The Washington Post said.
The White House “began highlighting cost overruns” in the Fed renovations “last summer after Trump grew unhappy that Powell wasn’t moving faster to cut interest rates,” The Wall Street Journal said. The “brouhaha” over costs “appeared to be an effort to erode the public’s trust in Powell, build a legal case to force him out, or both.” White House budget director Russell Vought — whose Project 2025 governing blueprint called for “effectively abolishing” the Fed — flagged Powell’s testimony for investigation in July, CNN said.
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“I don’t know anything about” the Justice Department’s actions, Trump told NBC News Sunday night, and “I wouldn’t even think of doing it that way” to pressure Powell to lower rates. This investigation removes “any remaining doubt” that Trump’s aides are “actively pushing to end the independence of the Federal Reserve,” Tillis said. “It is now the independence and credibility of the Department of Justice that are in question.”
What next?
Opposition by Tillis to Trump’s Fed picks, including a new chair when Powell’s term ends in May, “wouldn’t doom a confirmation on its own,” Semafor said. But it would leave the committee with an 11-11 split that “would require “extra steps from party leaders to break.” Trump’s unprecedented effort to fire Fed board member Lisa Cook goes before the Supreme Court for arguments Jan. 21.
