Fed subpoenaed, threatened with indictment: chair
Federal Reserve chairman Jerome Powell said the U.S. Department of Justice had subpoenaed the central bank and threatened to file criminal charges against the bank over its testimony about the Fed’s building renovations.
The move represents a major escalation in U.S. President Donald Trump’s fight with the Fed, an independent agency that he has repeatedly attacked for not lowering key interest rates as quickly as Trump would prefer.
Powell said the subpoena was related to testimony he gave before the Senate Banking Committee in June about the Fed’s US$2.5 billion ($3.7 billion) renovation of two office buildings, which Trump criticized as excessive.
In his video statement, Powell said the threats of criminal charges were “excuses” intended to undermine the Fed’s independence when it comes to setting interest rates.
“This is about whether the Fed can continue to set interest rates based on evidence and economic conditions, or whether monetary policy will instead be guided through political pressure or intimidation,” Powell said.
The Justice Department said in a statement that it could not comment on any specific cases, but added that Attorney General Pam Bondi “has instructed her U.S. attorneys to prioritize the investigation into the misuse of taxpayer dollars.”
The potential indictment has already raised concerns from one Republican senator, who said he would oppose any future nominee from the central bank, including Powell’s replacement, until “this legal matter is fully resolved.”
“If there was any doubt about whether advisers within the Trump Administration were actively pushing to end the independence of the Federal Reserve, there should be no doubt now,” said North Carolina Senator Thom Tillis, who sits on the Banking Committee, which oversees the Fed’s nominations.
“What is at stake now is the independence and credibility of the Ministry of Justice.”
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