WASHINGTON, D.C. – The Department of Justice’s investigation into Federal Reserve Chairman Jerome Powell has rattled some congressional Republicans. Some are worried this will erode the Fed’s independence. We spoke with a political scientist on why agencies like the Fed are meant to be independent from the White House.
Powell has been at the center of attacks by President Donald Trump over the Fed’s interest rates. Now with a DOJ investigation into Powell’s comments on Fed office building renovations, some members said the threat of criminal charges is an attempt to weaponize the justice system to affect economic policy.
“Anyone with two eyes and half a brain knows exactly what this criminal probe represents: a brazen attempt by Donald Trump to cannibalize the Fed’s independence,” said Sen. Chuck Schumer (D- NY). “The allegations behind this probe are clearly bogus. This has nothing to do with building renovations, of all things. It has everything to do with Donald Trump weaponizing the DOJ into his attack dog and bullying America’s central bank into submission, on something unrelated to what they do.”
Senator Thom Tillis (R- NC), a member on the Banking Committee, is questioning the Justice Department’s independence and credibility. Tillis said he will oppose the confirmation of any nominee for the Fed, including the upcoming Fed chair vacancy, until this legal matter is fully resolved.
“If the Justice Department is pursuing something, I hope they have a smoking gun or something because I don’t think you trifle with the Federal Reserve, with the Central Bank,” said Sen. John Thune (R- SD), Senate Majority Leader. “It is critical to the financial markets in this country. It’s critical to our economy. So, whatever is happening there and I don’t know what is, it’s hard to comment until we do know what it is but as I’ve said before it better be real and it better be serious.”
Dr. Casey Burgat, legislative affairs program director and associate professor with George Washington University, explains while the President gets to nominate people to the Federal Reserve, agencies like this one are meant to be independent from the White House.
“People are familiar with government agencies being fully government agencies and then we have a subset of semi-independent agencies where they are interrelated to government,” said Dr. Burgat. “Oftentimes their chairman or chairwoman are appointed by the President, so they’re involved in that way but the work they do is actually independent and it’s supposed to be. It’s supposed to be conducted by themselves using experts and to be reliant or dependent on political actors or political circumstances. We want the right information from the smartest minds on very specific topics in this case the Federal Reserve and monetary policy and those experts are supposed to work with all of their forecasters, their economists and then present or take action that congress has afforded them in statute mainly set monetary policy. Most everyone knows they set the Fed Reserve rates. So, the independence comes into question when they become dependent on political actors or in this case the President or the administration involving themselves in the actions of the Federal Reserve mainly Chairman Powell in this case to get what they want politically and that’s not how it’s supposed to work and the independence was built in from the system set for that reason.”
