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United States Federal Reserve chair Jerome Powell says the justice department has served the central bank with subpoenas and threatened criminal indictment over his testimony about the Fed’s building renovations.
The subpoena relates to his testimony before the senate banking committee in June, Powell said, regarding the Fed’s US$2.5 billion ($3.7 billion) renovation of two office buildings, a project that Trump criticised as excessive.
Powell cast off what has up to this point been a restrained approach to Trump’s criticisms and personal insults, which he has mostly ignored.
Over the weekend, he released a video statement in which he straightforwardly described the looming threat of criminal charges as mere “pretexts” aimed at eroding the Federal Reserve’s autonomy in determining interest rates.
Powell said: “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.”
It’s a sharp departure from the Fed’s understated response to Trump so far.
The central bank has tried to placate the administration by dialling back some policies, such as efforts to consider the impact of climate change on the banking system, that the administration clearly opposed.
During his testimony in June, Powell responded to several critiques concerning the Fed’s costly renovation of two historic office buildings, addressing the unexpected rise in expenses.
The White House did not immediately respond to a message seeking comment.
The justice department in a statement said it can’t comment on any particular case, but added attorney general Pam Bondi “has instructed her US attorneys to prioritise investigating any abuse of taxpayer dollars”.
With the subpoenas, Powell becomes the latest perceived adversary of the president to face a criminal investigation by the Trump administration’s justice department.
Meanwhile, Trump has openly called for the prosecution of his political rivals, breaking long-standing norms intended to keep the justice department’s investigative and prosecutorial actions free from White House influence.
The potential indictment has already drawn concern from one Republican senator, who said he’ll oppose any future nominee to the central bank, including any replacement for Powell, until “this legal matter is fully resolved”.
“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,” said North Carolina senator Thom Tillis, who sits on the banking committee, which oversees Fed nominations.
“It is now the independence and credibility of the Department of Justice that are in question.”
