U.S. President Donald Trump stated on Thursday that he continues to support the Justice Department's investigation into Federal Reserve Chair Jerome Powell. Analysts suggest this stance could further delay the nomination confirmation of Powell's potential successor, Kevin Warsh.
Speaking about Powell in the Oval Office, Trump remarked, "He's under investigation because he built a building at a cost much higher than it should have been." Trump was referring to the renovation of the Fed's headquarters in Washington, which is the focus of a federal criminal investigation into Powell led by U.S. Attorney Jeanine Pirro.
Powell has accused the Trump administration of initiating the investigation as retaliation for his refusal to cut interest rates as sharply or as quickly as Trump demanded.
Trump voluntarily added during his remarks, "He should cut rates immediately, but he won't, because he's a stubborn, incompetent person, and that's terrible."
Discussing the Fed building renovation, Trump claimed the multi-billion dollar cost indicated criminal activity, possibly involving the contractor. "All I want is for the public to know this person is incompetent, very incompetent, and he might be dishonest," Trump said.
Last week, U.S. District Judge James Boasberg blocked a grand jury subpoena in the investigation with a strongly worded ruling. He wrote, "Substantial evidence suggests the government issued these subpoenas to the Federal Reserve Board to pressure the Chair into voting for rate cuts or resigning."
Pirro stated she would appeal the ruling, calling it "outrageous."
Republican Senator Thom Tillis has repeatedly stated he will block Warsh's nomination from advancing in the Senate Banking Committee until the Justice Department drops its investigation into Powell. Warsh must first gain approval from this committee before his nomination can proceed to a full Senate vote for confirmation.
Tillis noted that while he personally supports Warsh, he believes the investigation undermines the Fed's long-standing independence from executive branch interference. "I can't possibly imagine the market reaction if it suddenly believed the Fed Chair was taking orders from the President," Tillis said.
On Wednesday, Powell stated he would not leave the Federal Reserve Board until the investigation is fully concluded with transparency and a final resolution. He also indicated he has not yet decided whether he will step down before his term as a governor ends, even after the investigation concludes. Powell said, "I haven't made that decision. I will decide based on what is best for the institution and the public we serve."
Powell's term as Fed Chair ends in May of this year, while his term as a governor lasts until 2028.
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