over 12 consecutive months of insults, disdain, pressures, and threats from the same U.S. president who appointed him in 2017. Donald Trump wants, demands, that the Fed lower interest rates, more than it has done since September, and blames the institution for many of the country's economic woes. He has already placed allies within the institution and will soon appoint Powell's replacement with clear instructions and no respect for the agency's independence. But instead of enjoying his imminent election, the president wants to punish those who have disregarded his directives.
This weekend, the District of Columbia's prosecutor, now led by former Fox presenter Jeanette Pirro, has formally opened a criminal investigation against Powell, arguing that he lied to Congress in his testimony about the renovation works at the Fed in Washington. The response from the veteran official, who has worked at the institution under four different presidents, has been firm, in a very tough tone and unafraid of confrontation. "I have a deep respect for the rule of law and accountability in our democracy. No one, and certainly not the Federal Reserve chairman, is above the law. But this unprecedented action must be considered in the broader context of the constant threats and pressure from the administration. This new threat has nothing to do with my testimony last June or the renovation of the Federal Reserve buildings. Nor with Congress's oversight function (...) These 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 benefit the public, rather than following the president's preferences."
Trump does not hide his animosity. He tried to force Powell to resign by all means necessary. "I insult him in every possible way to make him do something," said the president on June 19, bewildered by Powell's impassivity. "I do it in every possible way. I'm unpleasant. I'm kind. Nothing works," he confessed openly in front of the cameras. Days later, his team found an additional avenue, accusing Powell of having "terribly mismanaged the Federal Reserve. While it has had deficits since fiscal year 23 (the first time in history), the institution has vastly exceeded the budget allocated for the renovation of its headquarters. It now amounts to $2.5 billion, approximately $700 million more than its initial cost. These renovations include rooftop gardens, fountains, VIP elevators, and top-quality marble. The cost is double that of renovating an ordinary federal historic building. The Palace of Versailles would have cost $3 billion in today's dollars!" they warned in writing.
The president's team convinced him that there was no legal basis to dismiss Powell for his monetary decisions, and they emphasized the risks to the economy of such interference in monetary policy. The peak pressure phase seemed to be behind them. Until now. "This is about whether the Federal Reserve will be able to continue setting interest rates based on evidence and economic conditions, or if instead, monetary policy will be directed by political pressure or intimidation. I have served at the Federal Reserve under four administrations, both Republican and Democratic. In all cases, I have carried out my duties without fear or political favoritism, focused solely on our mandate of price stability and maximum employment. Public service sometimes requires standing firm against threats. I will continue to perform the work for which the Senate confirmed me, with integrity and a commitment to serving the American people," Powell concluded in a statement and a video message released this Sunday night, something entirely unusual for the institution.
As reported by The New York Times, the investigation was approved in November by Jeanine Pirro, a longtime friend and ally of the White House. And as confirmed by the Fed chairman, on Friday, the Department of Justice notified various members of the central bank of grand jury subpoenas. But one thing is to open the process and convene a grand jury, and another is to receive their approval to attempt prosecution.
A few days ago, Trump stated that he had decided who will replace Powell, and all bets point to Kevin Hassett, one of his top economic advisors. He already has another of his gurus, Stephen Miran, on the central bank's board. And in 2025, he tried to dismiss another important board member, Governor Lisa D. Cook, on accusations of mortgage fraud. Presidents can only remove Federal Reserve officials for "just cause." A federal court temporarily halted that dismissal, and the Supreme Court will hold a hearing at the end of this month.