Trump Digs In On Powell, Suggesting Doj Probe Should Continue

President Donald Trump is facing a head-on collision with Federal Reserve Chair Jerome Powell, and he’s not changing course.

Trump on Thursday signaled support for a Department of Justice criminal investigation of Powell that's connected to the Fed chair's testimony to a Senate panel concerning the renovation of the central bank's headquarters.

The probe is effectively holding up the nomination of Trump’s pick for the new Fed chair, Kevin Warsh, leaving open the possibility that Powell could stay atop the central bank even after his chairmanship ends in mid-May.

But Trump is suggesting the DOJ probe should continue, despite a ruling by a federal judge that the administration’s subpoenas were a “mere pretext” to pressure the Fed to lower interest rates. The situation has essentially evolved into a game of chicken, where the DOJ's moves might ultimately work against achieving what the president badly wants: Powell’s departure.

“He is under investigation because he is building a building … for hundreds of millions of dollars more than it’s supposed to cost,” Trump told reporters in the Oval Office. “Now, I know it’s gross incompetence, because I happen to think he’s grossly incompetent. Today, certainly, he should be lowering interest rates, alright, certainly, who would not lower them? But he’s stubborn, and he’s got Trump Derangement Syndrome.”

U.S. Attorney for D.C. Jeanine Pirro, whose office is leading the investigation, said in a press conference last week that she would appeal the court decision quashing her subpoena requests to the Fed.

That decision is expected to drag out the confirmation process for Warsh because Sen. Thom Tillis (R-N.C.), a senior member of the Banking Committee, which heard Powell’s testimony last year, says he will not vote to advance any Fed nominees until the DOJ probe is resolved.

Trump officials have suggested that Powell testified untruthfully about what the renovations entailed.

The investigation was revealed by Powell himself in an unprecedented video message in January, where he accused the administration of using the probe to pressure him to lower interest rates. Tillis, who is not running for reelection, has expressed similar fears.

“You got seven witnesses at this alleged scene of the crime — Republican members of the Banking Committee, including the chair, who said no crime was committed,” Tillis said last week. “What part of this is not reaching the point of the absurd?”

Powell said Wednesday that he expects to stay on as acting chair if a successor has not been confirmed by the time his term ends, adding that he did not intend to depart from his seat on the central bank’s seven-member board until after the probe is concluded.

The White House has not said whether it would challenge Powell’s ability to stay on as Fed chair after his term has ended, if no successor has been confirmed. The central bank chief previously served as acting chair after his term expired four years ago, while his renomination was pending.

“The White House remains focused on working with the Senate to swiftly confirm Kevin Warsh as the next Chairman of the Federal Reserve,” Trump spokesperson Kush Desai said in a statement.

Gregory Svirnovskiy contributed to this report.