Powell Probe Stirs GOP Concern, Threat to Stop Trump Nominee (3)

President Donald Trump faced rare opposition from key Republican lawmakers after Federal Reserve Chair Jerome Powell accused the Department of Justice of launching a grand jury investigation to pressure and intimidate the central bank.

Senator Thom Tillis, a key Republican on the Banking Committee who isn’t running for reelection, vowed quickly Sunday night to oppose any Trump nominees to the Fed until the matter is resolved. Other Republican senators, including former Bridgewater Associates CEO Dave McCormick, offered more measured pushback on Monday.

Tillis’s threat is a potential roadblock to Trump’s plans to bend the bank to his will. Opposition from Tillis would likely deadlock any Fed nominee on the Senate Banking Committee, which is divided 13-11 between the two parties. And under current Senate rules, it takes 60 votes to successfully discharge a contentious nomination from a committee and Democratic senators are highly unlikely to come to Trump’s aid.

Senate Majority Leader John Thune said the threat of a legal battle with the Fed could make confirming Fed nominees “challenging.”

“It needs to be resolved quickly, because the Fed’s independence in shaping monetary policy in the country is something that we need to ensure proceeds without political interference,” Thune told reporters at the Capitol on Monday. He warned that the allegations against Powell “better be real and they better be serious.”

The public opposition comes as Treasury Secretary Scott Bessent warned Trump that the investigation had made a mess and could be bad for financial markets, according to an Axios report on Monday. US Attorney Jeanine Pirro’s DC office launched the probe without giving a heads-up to Treasury, top White House officials or the main Justice Department, Axios said citing anonymous sources.

White House Press Secretary Karoline Leavitt said she hadn’t spoken to Trump about the threat from Tillis, but insisted Trump had not ordered the Justice Department investigation and believed in the independence of the Federal Reserve.

“One thing for sure — the president’s made it quite clear — is Jerome Powell is bad at his job,” Leavitt told reporters Monday. “As for whether or not Jerome Powell is a criminal, that’s an answer the Department of Justice is going to have to find out, and it looks like they intend to find that out.”

Republican Senator Lisa Murkowski of Alaska, who isn’t on the banking panel, said in a statement Monday that she would join Tillis in the blockade of Fed nominees. She denounced the Trump administration’s criminal investigation of Powell as “nothing more than an attempt at coercion” and said Congress should launch an investigation of the Justice Department if it persists with the probe.

McCormick, a Banking Committee member, said in a statement Monday that he does “not think Chairman Powell is guilty of criminal activity.”

Republican Senator Kevin Cramer of North Dakota, another member of the banking panel, also said he doesn’t think Powell committed a crime and expressed “hope this criminal investigation can be put to rest quickly.”

The Republican outcry comes after Trump has faced a series of defections among Republicans in both the House and Senate, including votes last week to extend Biden-era health care subsidies in the House and a Senate vote advancing legislation to end military action in Venezuela.

Trump has for months pressured the Federal Reserve to quickly and deeply cut interest rates. Various parts of the administration have taken aim at sitting Fed governors, including Lisa Cook, a Joe Biden pick, and now, Powell.

Tillis, a North Carolina senator, issued his blockade threat shortly after news of the grand jury investigation broke Sunday evening.

“If there were any remaining doubt whether advisers within the Trump Administration are actively pushing to end the independence of the Federal Reserve, there should now be none,” Tillis said in a statement. “It is now the independence and credibility of the Department of Justice that are in question.”

Senator Thom Tillis

Photographer: Al Drago/Bloomberg

“I will oppose the confirmation of any nominee for the Fed — including the upcoming Fed chair vacancy — until this legal matter is fully resolved,” said Tillis, who also sits on the Judiciary Committee, which has oversight over the Justice Department.

Three former Fed chairs and four former Treasury secretaries — from Democratic and Republican administrations — also issued a statement condemning the DOJ investigation, saying it would undermine the US central bank’s independence.

“This is how monetary policy is made in emerging markets with weak institutions, with highly negative consequences for inflation and the functioning of their economies more broadly,” they said. “It has no place in the United States, whose greatest strength is the rule of law, which is at the foundation of our economic success.”

Explainer: What’s at Stake in the Fight Over Fed Independence

Former Fed Chairs Janet Yellen, Ben Bernanke and Alan Greenspan, the only three living past chairs, signed the short statement. They were joined by former Treasury secretaries Timothy Geithner, Jacob Lew — who both served under President Barack Obama — Henry Paulson, who served under President George W. Bush, and Robert Rubin, who served under President Bill Clinton. Yellen also helmed the Treasury under President Joe Biden.

Powell Statement

In a written and video statement released Sunday evening, Powell said the action was related to his June congressional testimony on ongoing renovations of the Fed’s headquarters. But he said the move “should be seen in the broader context of the administration’s threats and ongoing pressure.”

Powell 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.”

In an interview with NBC News on Sunday, Trump denied having any knowledge of the DOJ’s investigation into the central bank.

Read more: Fed Served With DOJ Subpoenas, Powell Vows to Stand Firm

Democrats swiftly issued statements of condemnation.

“Trump wants to nominate a new Fed Chair AND push Powell off the Board for good to complete his corrupt takeover of our central bank,” wrote Senator Elizabeth Warren, the top Democrat on the Banking Committee. “He is abusing the law like a wannabe dictator so the Fed serves him and his billionaire friends. The Senate must not move ANY Trump Fed nominee.”

Senate Democratic leader Chuck Schumer said undermining the independence of the Fed threatens the economy.

“Anyone who is independent and doesn’t just fall in line behind Trump gets investigated,” he said.

Florida Republican Representative Anna Paulina Luna, who had sought an investigation into Powell’s statements to Congress about renovations at the Fed, cheered the news in a post on X.

“Unelected bureaucrats do not get a free pass,” she wrote.

--With assistance from Alicia Diaz, Erik Wasson, Magan Crane and Caitlin Reilly.

To contact the reporter on this story:
Steven T. Dennis in Washington at sdennis17@bloomberg.net

To contact the editors responsible for this story:
Megan Scully at mscully32@bloomberg.net

Mike Dorning, Laura Davison

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