WASHINGTON, D.C. – Federal Reserve Chair Jerome Powell said the Department of Justice served the Central Bank with subpoenas and threatened a criminal indictment over his testimony about the Fed’s building renovations. Powell said this unprecedented action should be seen in the broader context of the administration’s threats and ongoing pressure.
In a brief video released by Powell, the subpoenas relate to Powell’s testimony before the Senate Banking Committee last summer regarding the Fed’s $2.5 billion dollar renovation of office buildings. Here is Powell’s full statement regarding the DOJ probe:
“On Friday, the Department of Justice served the Federal Reserve with grand jury subpoenas threatening a criminal indictment related to my testimony before the Senate Banking Committee last June. That testimony concerned in part a multi-year project to renovate historic Federal Reserve office buildings. I have deep respect for the rule of law and for accountability in our democracy. No one, certainly not the chair of the Federal Reserve, is above the law. But this unprecedented action should be seen in the broader context of the administration’s threats and ongoing pressure. This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings. It is not about Congress’s oversight role. The Fed, through testimony and other public disclosures, made every effort to keep Congress informed about the renovation project. Those are pretexts. 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 preferences of the president. This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions or whether instead monetary policy will be directed by political pressure or intimidation. I have served at the Federal Reserve under 4 administrations, Republicans and Democrats alike. In every case, I have carried out my duties without political fear or favor, focused solely on our mandate of price stability and maximum employment. Public service sometimes requires standing firm in the face of threats. I will continue to do the job the Senate confirmed me to do with integrity and a commitment to serving the American people. Thank you.”
President Donald Trump has criticized the renovation project and has aired his frustrations with the Central Bank for not cutting interest rates as sharply as he prefers.
There’s mixed reaction on the Hill regarding the DOJ investigation.
New York Democratic Senator Kirsten Gillibrand (D- NY) released this statement:
“A government that demands blind obedience through punishment is the hallmark of authoritarian regimes, not America. I oppose the wanton act of legal intimidation against Federal Reserve Chair Powell and will continue to support the vigorous independence of the Federal Reserve. In the first year of this administration, its economic and legal campaign of fear, punishment, and chaos have failed the American people. Costs are rising, trust has fallen, and the American people and businesses are being hurt. This ridiculous and blatant abuse of power does not just hurt the Federal Reserve, but threatens the stability of the American economy. As Chairman Powell made clear, the administration’s legal targeting of him ‘is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions—or whether instead monetary policy will be directed by political pressure or intimidation.’ Regardless of party, I urge my colleagues to stand for the independence of our justice system and Federal Reserve to protect our economy and the American people.”
Some other sharp criticisms were made from Republicans. Senators Lisa Murkowski (R- AK) and Thom Tillis (R- NC) aired concerns about the investigation and maintaining the Fed’s and Justice Department’s independence.
When Speaker of the House Mike Johnson (R- LA) was asked if the DOJ’s probe into Powell compromised the credibility and independence of the DOJ, the Speaker replied, “of course not.” Here’s what he said afterwards:
“They’re doing their job,” said the Speaker. “I mean, if the investigation is warranted, then they have to play that out. We’ll see what happens. The allegation is serious, so we’ll see.”
Powell’s term as chairman will end in a few months but he will still have a seat on the board of governors for the next two years. We reached out to the Justice Department but did not hear back. The White House maintains the President did not ask the DOJ to investigate Powell.
