The criminal investigation into Federal Reserve Chair Jerome Powell by the Department of Justice has sparked concerns among allies and officials of President Donald Trump.
Following the public disclosure of the investigation, Sen. Thom Tillis (R. N.C.) announced he would oppose any Fed nominee put forward by Trump until the legal matter is resolved. This could potentially block a nominee from reaching a full floor vote, given the narrow split in the Senate Banking Committee.
Sen. John Kennedy (R-La.) criticized the investigation, warning that a public clash between the White House and the Federal Reserve could push interest rates higher rather than lower, calling such a confrontation unnecessary and counterproductive.
Meanwhile, despite expressing concerns about the investigation, Senate Majority Leader John Thune (R., S.D.) and Speaker Mike Johnson (R-La.) want the investigation to play out and take its course.
Bessent Reportedly Warned Trump
As per an Axios report on Monday, Treasury Secretary Scott Bessent had warned Trump that the federal probe into the Fed chair had “made a mess” and could harm financial markets.
Axios also reported that senior Trump administration officials said the push for a criminal probe may have come in part from FHFA Director Bill Pulte, though he denied any involvement and said on Bloomberg TV on Monday that the matter was outside his purview, deferring questions to the DOJ.
Notably, Trump distanced himself from the issue and told NBC News on Sunday that he did not have any knowledge of the probe, but slammed Powell for being “bad” at Fed and construction matters.
Powell Probe Fuels Fed fears
The investigation into Powell comes after months of tension between the Trump administration and the Federal Reserve. In a statement on Sunday, Powell accused the Department of Justice of using the Fed’s $2.5 billion headquarters renovation and related grand jury subpoenas as “pretexts” to control U.S. monetary policy.
Economist Justin Wolfers has warned that Powell is “going to war” to protect the Fed’s independence against what he calls the “Department of Recriminations.” This conflict has led to fears about the Fed’s independence, with investors reassessing the Fed’s independence and driving gold and silver prices to record highs on Monday. At the same time, former Fed Chair Janet Yellen called the probe “chilling and warned that the market should be concerned about it.
Image via Shutterstock
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Recent Comments