(AFP) – The US Justice Department dropped a criminal probe against Federal Reserve Chair Jerome Powell on Friday, clearing the way for his replacement’s Senate confirmation, amid concerns over President Donald Trump’s attacks on the independent central bank.
“I have directed my office to close our investigation,” US Attorney Jeanine Pirro announced on X. Pirro said the inspector general for the Fed would instead look into renovation cost overruns at its headquarters, which the Justice Department had been probing — under heavy pressure from Trump. However, she added that she would “not hesitate to restart a criminal investigation should the facts warrant doing so.”
Trump has upended Washington norms by routinely criticizing the Fed for not following his calls to cut interest rates more rapidly, while making personal attacks on Powell in particular. The probe into Powell, whose term helming the Fed expires May 15, looked likely to hold up the Senate’s confirmation of Trump’s pick for a new chairman. Now, Pirro’s announcement is set to ease that path.
The Trump administration “remains as confident as before that the Senate will swiftly confirm Kevin Warsh as the next Federal Reserve Chairman,” White House spokesman Kush Desai said soon after the Justice Department probe was dropped. The investigation had been criticized by former Fed chiefs and lawmakers as an attempt to undermine the central bank’s independence from politics.
At Warsh’s confirmation hearing this week before the Senate Banking Committee, Republican senator Thom Tillis reiterated that he would continue blocking new appointments to the Fed if the Powell investigation were not resolved. Tillis’s vote against the appointment would have been enough to set up an impasse on the panel, which Warsh needs to clear to become the next Fed chief.
But the top Democrat on the Banking Committee, Senator Elizabeth Warren, warned that the closure of the investigation does not end political pressure on the Fed.
– ‘Bogus’ investigation –
“Let’s be clear what the Justice Department announced today: they threatened to restart the bogus criminal investigation into Fed Chair Powell at any time while failing to drop their ridiculous criminal probe against Governor Lisa Cook,” she said. Warren was referring to a separate attempt by Trump to fire Cook over allegations of mortgage fraud. The case is currently before the Supreme Court, which is expected to rule on whether he can oust her.
Powell first took the helm of the Fed during Trump’s first presidency in 2018 and was subsequently reappointed to the position under Democratic president Joe Biden. Apart from Tillis’s objections on the Senate panel, Powell himself said last month that he would not leave his post on the Fed’s board of governors until the Justice Department probe involving him was “well and truly over, with transparency and finality.”
It is rare for a former Fed chair to remain on its board after stepping down as chief, and Powell’s Fed governor term ends in 2028. It remains to be seen if Powell plans to stay on with the probe now being dropped. All eyes will be on his remarks at a press conference next week after a two-day policy meeting among Fed officials.
– Beiyi SEOW
© 2024 AFP
