Lawmakers expressed concern regarding the Justice Department's criminal inquiry into Federal Reserve Chairman Jerome Powell, potentially jeopardizing President Donald Trump's efforts to appoint a new central bank leader. Powell disclosed Sunday that the DOJ served the Fed with grand jury subpoenas, threatening a possible criminal indictment related to his testimony before the Senate last June concerning renovations at the Fed headquarters, which have experienced cost overruns.
Powell characterized the allegations as a pretext, suggesting the investigation was aimed at undermining the Fed's ability to set interest rates independently of political influence. While Trump has criticized Powell for his reluctance to cut rates over the past year, the president stated he was unaware of the DOJ probe.
Republican Sen. Thom Tillis, a member of the Senate Banking Committee, echoed Powell's sentiments and criticized the DOJ. "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," Tillis wrote in a post on X. "It is now the independence and credibility of the Department of Justice that are in question."
The investigation stems from Powell's testimony regarding cost overruns associated with the renovation of the Federal Reserve's headquarters. The DOJ is reportedly examining whether Powell misled the Senate Banking Committee during his testimony. The Federal Reserve is responsible for setting monetary policy, including interest rates, and maintaining the stability of the financial system. Its independence from political influence is considered crucial for its effectiveness.
The inquiry and subsequent backlash from Congress introduce uncertainty surrounding the future leadership of the Federal Reserve. Tillis's pledge to block any Fed nominee until the case is resolved could significantly impact the confirmation process for any potential replacements for Powell or other open positions within the central bank. The situation remains ongoing, and the next steps will likely depend on the findings of the DOJ investigation and the response from Congress.
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