The Chairman of the Federal Reserve, Jerome Powell, stated this Sunday that the Department of Justice summoned the central bank to a hearing, threatening criminal charges for its testimony on the renovations of the Fed building.
Video Disagreement on camera: Powell confronts Trump over cost of Fed headquarters renovation
Fed Chair Jerome Powell said Sunday that he could face criminal charges and attributed it to President Donald Trump’s pressure campaign over the Fed’s monetary policy decisions.
“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the president’s preferences,” Powell said in the statement.
Powell indicated that the Fed received grand jury subpoenas as part of an investigation into alleged irregularities in the renovation of the institution’s buildings in Washington. Trump has said the work exceeded expected costs, which Powell denies.
The move represents an unprecedented escalation in Trump’s dispute with the Fed, an independent agency he has repeatedly attacked for failing to comply with his wishes for a more drastic reduction in its benchmark interest rate. The renewed fighting is likely to shake financial markets on Monday and could, over time, raise borrowing costs for mortgages and other credit.
“No one is above the law, not even the Fed Chair, but these unprecedented actions must be seen in the broader context of this administration’s threats and current pressure,” Powell said in a video statement.
“This new threat is not about my testimony last June” before Congress, “or about the renovations of the Fed headquarters (…) these are pretexts,” Powell said, to undermine the independence of the central bank when it comes to setting interest rates.
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A spokesman for U.S. Attorney Jeanine Pirro’s office did not immediately respond Sunday to AP’s text message and phone call seeking comment.
In a brief interview with NBC News on Sunday, Trump insisted he knew nothing about the investigation into Powell. Asked if the investigation was aimed at pressuring Powell on interest rates, Trump responded: “No. I wouldn’t even think of doing it that way.”
Why are they investigating the Fed?
The subpoena refers to his testimony before the Senate Banking Committee in June, Powell said, regarding the Fed’s $2.5 billion renovation of two office buildings, a project Trump criticized as excessive this summer.
The Fed chief said he has served under four Republican and Democratic administrations, during which he always carried out his responsibilities without political leanings. “Focused only on our mandate of price stability and maximum employment,” he emphasized.
” Public service sometimes requires standing firm in the face of threats. “I will continue to do the job for which the Senate confirmed me, serving the American people with integrity and commitment,” Powell said.
The Justice Department stated Sunday that it cannot comment on any particular case, but added that Attorney General Pam Bondi “has instructed her federal prosecutors to prioritize investigating any abuse of taxpayer dollars.”
The potential indictment has already raised concerns from one Republican senator, who has stated that he will oppose any future central bank nominee, including any replacement for Powell, until “this legal matter is fully resolved.”
“If there was any question about whether Trump administration advisers are actively pushing to end the independence of the Federal Reserve, there should be no question now,” said Sen. Thom Tillis, R-North Carolina, a member of the Banking Committee, which oversees Fed appointments. “Now it’s the independence and credibility of the Justice Department that’s in question.”
Trump has also attacked Lisa Cook, a member of the Fed’s board of governors, going so far as to say that he was firing her alleging that she had committed irregularities in mortgage applications, without proving it. Cook argued his case in court and the Supreme Court plans to discuss the case this month.
Gold and silver break records after US Federal Reserve investigation
Gold and silver reached record prices on Monday amid fears about the erosion of the Fed’s autonomy that the investigation may show.
Gold reached $4,600 an ounce and silver hit $85, both record prices that reflect investors seeking safe havens amid political uncertainty in the United States.
“The subpoenas mark a clear break in the long-held boundary between politics and monetary policy, a line that markets previously assumed was untouchable,” Stephen Innes of SPI Asset Management told AFP.
“Investors are weighing not so much the likelihood of accusations as the risk that political pressure has infiltrated the Fed’s decision-making,” Innes added.
With information from AP and AFP
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