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The U.S. attorney’s office in the District of Columbia has opened a criminal investigation into Jerome H. Powell, the Federal Reserve chair, over the central bank’s renovation of its Washington headquarters and whether Mr. Powell lied to Congress about the scope of the project, according to officials briefed on the situation. The inquiry, which includes an analysis of Mr. Powell’s public statements and an examination of spending records, was approved in November by Jeanine Pirro, a longtime ally of President Trump who was appointed to run the office last year, the officials said.
The investigation escalates Mr. Trump’s long-running feud with Mr. Powell, whom the president has continually attacked for resisting his demands to slash interest rates significantly. The president has threatened to fire the Fed chair and raised the prospect of a lawsuit against him related to the $2.5 billion renovation, citing “incompetence.”
AN ESCALATING FIGHT
Mr. Trump told The New York Times in an interview last week that he had decided on who he wants to replace Mr. Powell as Fed chair. He is expected to soon announce his decision. Kevin A. Hassett, Mr. Trump’s top economic adviser, is a front-runner for the top job. While Mr. Powell’s term as chair ends in May, his term as a governor runs through January 2028.
In a rare video message released by the Fed on Sunday, Mr. Powell described the investigation as “unprecedented” and questioned the motivation for the move, even as he affirmed that he carried out his duties as chair “without political fear or favor.” “This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings,” he said. “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.”
He warned that the investigation signaled a broader battle over the Fed’s independence. “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,” he added. “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.”
A spokesman for Attorney General Pam Bondi did not comment on the investigation but said Ms. Bondi had “instructed her U.S. attorneys to prioritize investing any abuses of taxpayer dollars.” The U.S. attorney’s investigation into Mr. Powell underscores Mr. Trump’s larger clash with the Fed. Other broadsides have included an effort to oust Lisa D. Cook, a governor at the central bank whom Mr. Trump tried to fire over allegations of mortgage fraud. Presidents are able to remove officials at the Fed only for “cause,” which has typically meant malfeasance or a dereliction of duty. The Supreme Court will hear arguments for Ms. Cook’s case on Jan. 21.
Congress granted the Fed the authority to set interest rates free of meddling from presidents, whose political fortunes are often tethered to how the economy is faring. Rather, lawmakers stipulated that the central bank should pursue low, stable inflation and a healthy labor market. Mr. Powell said on Sunday that the Justice Department had served the Fed with grand jury subpoenas. Prosecutors in Ms. Pirro’s office have contacted Mr. Powell’s staff multiple times to request documents about the renovation project, according to an official with knowledge of the investigation who discussed an open inquiry on the condition of anonymity.
Starting an investigation is one thing, presenting sufficient evidence to secure an indictment from a federal grand jury — or making it stick — is another. Indictments against two of Mr. Trump’s top targets, the former F.B.I. director James B. Comey and Letitia James, the New York attorney general, were thrown out in November by a federal judge. An investigation into Senator Adam B. Schiff, Democrat of California, has yet to yield enough evidence to present to a grand jury.
The renovations at the center of the investigation into Mr. Powell broke ground in 2022 and are set to be completed in 2027. They are estimated to be about $700 million over budget. The project involves expanding and modernizing the Marriner S. Eccles Building and another building on Constitution Avenue, which date to the 1930s. The Fed has said that neither of those buildings has been “comprehensively renovated” since their construction nearly 100 years ago, suggesting they were in need of a significant overhaul. Part of the project includes removing asbestos and lead contamination as well as making the facilities compliant with laws related to accessibility for people with disabilities.
In explaining the cost overruns, the central bank cited expenses tied to materials, equipment and labor as well as unforeseen circumstances, such as more asbestos than anticipated and soil contamination.
© 2015 Mutual Fund Observer. All rights reserved.
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Comments
Another day, another distraction.
Fed chair hits back, accusing DoJ of threatening criminal charges because central bank defied Trump’s demands
Reeks of desperation.
Yet another distraction from his LATEST failure/fiasco/f*ck-up
to end the independence of the Federal Reserve, there should now be none," Tillis said in a statement.
There should not have been any doubt for anyone paying attention to these events.
"It is now the independence and credibility of the Department of Justice that are in question," the senator said.
The credibility of the Department of Justice collapsed months ago.
After the current administration's demise, it will take arduous work to re-establish the DOJ's credibility.
The Federal Reserve Buildings aren’t historically protected buildings are they?
Yes, these buildings are protected.
Another historic building was partially demolished recently without a formal review process.
I can only assume the review process is overly "bureaucratic" and inconvenient to implement.
https://bsky.app/profile/gtconway.bsky.social/post/3mc73ftktkj2w
But Anna's right -- Donnie is only the figurehead; it's his enablers in Congress, and those who keep electing them that's the bigger problem. But the system indeed is fundamentally rigged (to use Donnie's favorite term) -- whether it's gerrymandered districts (both parties do this) to ensure it's hard or impossible for another party to win the district, an Electoral Collage setup that limits which states are 'important' for a presidential election, or a Senate that gives overwhelming power to smaller states with fewer people, etc.
But the real problem is, no government, of either party, is going to initiate reforms that allowed it to gain (or retain) power ... so the cycle goes on and on, and I remain cynical.
Still this means that these are a large number of very stupid people. Uninformed, malformed, poorly educated, a complete failure to understand. They don't get The Constitution, Separation of Powers, checks and balances, civics in general. They do not understand history.
The only thing that will ever regain even a modicum of respect for this nation, would be a complete rejection of this in 2026 and beyond. Followed by, real, serious prosecutions for people that have committed real, serious crimes.
it is probably not going to happen. Hence, all of our cynicism.
The MAGA 40% are so angry at the world that losing their own health benefits and their meager retirement benefits takes a back seat. Lower their standard of living? Meh. The hatred simply rules all.
It's chilling in that this kind of manipulation is difficult to correct/unwind. Thus the cult-like atmosphere in certain parts of the US. Very sticky and very destructive.
I wrote a much longer post, saying the exact same thing. And inadvertently deleted it. They are people incapable of owning their failures, so they blame!
Hatred does lead to irrationality. And irrationality is first cousin to stupidity.
Man, I just hate it when I do that. And the one that "got away" was always, at least as I remember, the best one ever.
(link1)
"US stock market crashes today: Why Dow, S&P 500 and Nasdaq down today? Here’s why fears over the Federal Reserve triggered a market pullback"
(link2)
"Dow Jones Futures Fall With Fed Chief Powell Under Criminal Probe"
At close: the SP500 made another high.
Fake news again?
Trump’s Attack on the Fed Is Already Backfiring
Why the need for lower FED funds rates in a promised/proclaimed strong economy? Or is the economy bordering on problems? With ~3% annual inflation, what do lower rates bring? The textbook answers is more inflation.
Meanwhile the stock market does what the stock market will do, it carries on despite politics. Until the combined weight of flawed policy, added taxation, supply chain disruption, job insecurity and poor sentiment, one day, flips the switch.
That much is inevitable, but the timing is impossible to predict. In the short term, it will never matter. Prices will continue to rise all year. Even at 3%, voters will keep getting more frustrated. Housing costs will stay elevated. You don't fix a persistent supply shortage by lowering borrowing costs. Or deporting the labor force. Lower rates may even elevate prices. It has in the past.
These are the words of a GOP Congressman. Harsh words. Dark words. Meanwhile, the slow wildebeest will continue to focus on irrelevancies. It is to be expected.