President Donald Trump is caught in a peculiar bind. He threatened to fire Federal Reserve Chair Jerome Powell if he refuses to step down after his term expires next month, yet simultaneously endorsed the criminal investigation that could prevent Powell's successor from taking the job.
In a Wednesday interview with Fox Business, Trump made clear his impatience. "If he's not leaving on time, I've held back firing him," Trump said of Powell. "I've wanted to fire him, but I hate to be controversial." Powell's chairmanship expires May 15, though it remains unclear whether he will depart the board entirely.
The real snag is Senate Republicans. Trump's pick to replace Powell, Kevin Warsh, has a confirmation hearing scheduled for next week. But Sen. Thom Tillis, R-N.C., a member of the Senate Banking Committee, announced he will block Warsh's nomination advancement until the Justice Department halts its criminal investigation into Powell over cost overruns on Federal Reserve property renovations.
Tillis framed his stance as principled. He told NBC News that the DOJ probe appears designed solely to ingratiate someone with the White House, and "I don't want to reward bad behavior." Tillis said he will vote for Warsh the moment the Justice Department announces insufficient evidence to continue the investigation. Without that outcome, he declared, there is "no path" for Warsh outside of his committee vote.
Senate Majority Leader John Thune, R-S.D., effectively sided with Tillis, saying "I think it's in everybody's best interest to wrap up the investigation." Thune expressed eagerness to confirm Warsh but acknowledged that resolving the Powell probe first would be preferable.
When Fox Business host Maria Bartiromo asked whether ending the investigation would be the easiest route to removing Powell, Trump acknowledged it would be. But then he pivoted to defending the probe itself, citing the construction project's massive budget expansion. The original 2019 estimate was $1.4 billion. The Federal Reserve now estimates costs will exceed $2.4 billion.
"It's more than a criminal probe," Trump said. "It's also probe on incompetence." He insisted that regardless of whether the issue involves incompetence, corruption, or both, accountability was necessary.
Powell, whose board term extends until 2028, has already signaled he will not budge while the investigation continues. "I have no intention of leaving the board until the investigation is well and truly over with transparency and finality," Powell said last month. He added that if Warsh is not confirmed by May 15, Powell could remain as acting Fed chair.
The Powell investigation centers on his testimony to the Senate about the renovation project. In January, the Justice Department subpoenaed the Federal Reserve seeking details about the work. U.S. Attorney for the District of Columbia Jeanine Pirro's office is leading the inquiry.
A federal judge dealt the investigation a significant blow in recent weeks. Judge James Boasberg, chief judge of the U.S. District Court for Washington, D.C., blocked the subpoenas, stating that "the Government has produced essentially zero evidence to suspect Chair Powell of a crime." Yet Pirro has apparently continued the probe. Three officials from her office visited the Fed's renovation site in downtown Washington on Tuesday seeking a tour, according to communications with the central bank's outside counsel.
Pirro defended the investigation Tuesday night. "Any construction project that has cost overruns of almost 80% over the original construction budget deserves some serious review," she said, adding pointedly: "And these people are in charge of monetary policy in the United States?"
Powell had previously blasted the investigation when it became public. "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 said.
The constitutional question of whether Trump can fire Powell remains murky. Presidents can remove Federal Reserve chairs only "for cause," meaning for demonstrable wrongdoing. Earlier this year, the Supreme Court appeared skeptical of Trump's efforts to fire another Federal Reserve board member, Lisa Cook, on similar grounds. A ruling in that case is still pending.
Trump expressed optimism that Tillis would reverse course. "He doesn't want the legacy of having an incompetent guy stay there for longer than is necessary. I know Thom Tillis. He's a good man," Trump said, though he acknowledged the senator "maybe it's true" that he meant what he said about blocking the vote.
Senate Minority Leader Chuck Schumer, D-N.Y., pushed back sharply. "There are no legitimate grounds for the president to remove the chair of the Federal Reserve for simply doing his job," Schumer said on the Senate floor, warning that interference with the Fed would only raise interest rates further.
Author Sarah Mitchell: "Trump wants Powell gone but also wants the investigation that's keeping everyone stuck in limbo to continue. It's a contradiction that perfectly captures the dysfunction ahead for whoever ends up running the central bank."
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