Senate Republican Questions DOJ's Independence Amid Fed Chair Investigation
Senator Thom Tillis, a Republican from North Carolina, has raised concerns about the independence and credibility of the Department of Justice (DOJ) following a criminal investigation into Federal Reserve Chair Jerome Powell. This development comes after President Donald Trump has consistently criticized Powell’s leadership, particularly regarding his decisions on interest rates.
Tillis expressed his concerns on social media, stating that any remaining doubts about the Trump administration's efforts to undermine the Federal Reserve's independence should now be dispelled. He emphasized that the current situation calls into question the integrity of the DOJ.
He announced his intention to oppose the confirmation of any nominees for the Federal Reserve, including the upcoming chair position, until the legal matter is fully resolved. His remarks were made in response to reports by The New York Times indicating that Powell was under investigation over the renovation of the Fed building.
Powell Addresses the Investigation
Before the NYT report, Powell released a two-minute video addressing the probe. In it, he stated that the investigation was not related to the renovation but rather a consequence of his refusal to lower interest rates as per the president's demands. Powell described this as a direct result of not complying with the president's preferences.
He also mentioned that the DOJ had served the Federal Reserve with grand jury subpoenas following his testimony to the Senate Banking Committee on the renovation project. This led to increased scrutiny of Powell's actions and decisions.
Trump's Criticism of Powell
President Trump has repeatedly criticized Powell for not moving quickly enough on rate cuts, even giving him the nickname "Too Late." The NYT reported that the investigation was spearheaded by Jeanine Pirro, who analyzed Powell's public statements and spending records.
Powell clarified in his video that the criminal probe had nothing to do with the Fed renovation. He emphasized that the investigation was not about his testimony or the renovation project itself, but rather about the Fed's decision-making process.
He highlighted that the Fed had made every effort to keep Congress informed about the renovation through testimony and other public disclosures. However, he pointed out that these were just pretexts for the real issue: the Fed's ability to set interest rates based on evidence and economic conditions without political pressure.
Trump's Legal Threats
This controversy follows Trump's comments in late December where he considered suing Powell for "gross incompetence" due to the rising costs of the Fed building renovation. He claimed the cost had exceeded $4 billion, which is $1.5 billion more than initially projected.
Trump attributed the high cost to the Democrats, suggesting that the project was Powell's "baby." His remarks sparked further debate about the relationship between the executive branch and the Federal Reserve.
Market Reactions
The news surrounding Powell and the investigation affected the stock market, with the S&P 500, Nasdaq, and Dow Jones all showing declines in overnight futures, ranging between 0.33% and 0.67%.
This situation highlights the ongoing tension between the Federal Reserve and the executive branch, raising questions about the independence of key institutions and the potential impact of political pressures on monetary policy.
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