Washington D.C.- federal Reserve chairman Jerome Powell revealed Sunday that the Department of Justice has issued a grand jury subpoena to the central bank,raising the specter of potential criminal charges linked to his testimony regarding a $2.5 billion renovation project. The move,which Powell attributes to pressure from the Trump management over monetary policy,marks a significant escalation in tensions between the White House and the traditionally autonomous Federal Reserve and has already sent shockwaves through financial markets. The examination centers on allegations of irregularities within the building renovations, and comes as President Trump continues to publicly criticize the Fed’s interest rate decisions.
Federal Reserve Chairman Jerome Powell revealed Sunday that the Department of Justice has issued a subpoena to the central bank, threatening criminal charges related to his testimony concerning renovations at the Federal Reserve building.
Video Disagreement on camera: Powell confronts Trump over the cost of renovating the Fed headquarters
Federal Reserve Chairman Jerome Powell stated Sunday that he could face criminal charges, attributing the potential indictment to pressure from President Donald Trump regarding the central bank’s monetary policy decisions. This development introduces a new layer of uncertainty to the relationship between the White House and the independent Federal Reserve.
“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,” Powell said in a statement, “rather than following the preferences of President Trump.”
Powell indicated the Fed received a grand jury subpoena as part of an investigation into alleged irregularities in the institution’s building renovations in Washington. Trump has claimed the renovations exceeded projected costs, a claim Powell denies. The investigation centers around a $2.5 billion project to renovate two office buildings, according to Powell.
The situation represents an unprecedented escalation in the dispute between Trump and the Fed, an independent agency he has repeatedly attacked for not meeting his demands for a more significant reduction in its benchmark interest rate. The renewed conflict is likely to unsettle financial markets Monday and could potentially increase borrowing costs for mortgages and other credit lines.
“No one is above the law, not even the Chairman of the Federal Reserve, but these unprecedented actions must be viewed in the broader context of the threats from this administration and the current pressure,” Powell stated in a video statement.
“This new threat isn’t about my testimony in June before Congress, or about the renovations to the Fed headquarters… these are pretexts,” Powell asserted, aimed at undermining the central bank’s independence in setting interest rates.
A spokesperson for federal prosecutor Jeanine Pirro did not immediately respond Sunday to a text message and phone call seeking comment.
In a brief interview with NBC News Sunday, Trump insisted he knew nothing about the investigation into Powell. When asked if the investigation was intended to pressure Powell on interest rates, Trump responded: “No. I wouldn’t even think of doing it that way.”
Why the Fed is Under Investigation
The subpoena relates to his testimony before the Senate Banking Committee in June, Powell said, concerning the Fed’s renovation of two office buildings at a cost of $2.5 billion, a project Trump criticized this summer as excessive.
The Fed chief said he has served under four Republican and Democratic administrations, consistently fulfilling his responsibilities without political bias. “Focused solely on our mandate of price stability and maximum employment,” he emphasized.
“Public service sometimes requires standing firm in the face of threats. I will continue to do the job to which the Senate confirmed me, serving with integrity and commitment to the American people,” Powell assured.
The Department of Justice stated Sunday it could not comment on any particular case, but added that Attorney General Pam Bondi “has instructed her federal prosecutors to prioritize the investigation of any abuse of taxpayer money.”
The potential indictment has already raised concerns from one Republican senator, who has stated they will oppose any future candidate to the central bank, including any replacement for Powell, until “this legal matter is fully resolved.”
“If there were any doubt about whether advisors to the Trump Administration are actively working to end the independence of the Federal Reserve, there should be no doubt now,” said Republican Senator Thom Tillis of North Carolina, a member of the Banking Committee, which oversees Fed appointments. “Now it is the independence and credibility of the Department of Justice that are being called into question.”
Trump has also attacked Lisa Cook, a member of the Fed’s Board of Governors, going so far as to say he was firing her alleging irregularities in mortgage applications, without providing proof. Cook defended her case in court and the Supreme Court is scheduled to discuss the case this month.
Gold and Silver Hit Records Following Federal Reserve Investigation
Gold and silver reached record highs Monday amid fears of erosion of the Fed’s autonomy stemming from the investigation. The surge in precious metals reflects investor flight to safety amid heightened political uncertainty.
Gold reached $2,600 per ounce and silver hit $35, both record prices reflecting investors seeking safe havens amid political uncertainty in the United States.
“The subpoenas mark a clear break in the long-held boundary between politics and monetary policy, a line that markets previously assumed was untouchable,” commented Stephen Innes of SPI Asset Management to AFP.
“Investors aren’t weighing the probability of indictments as much as the risk that political pressure has infiltrated the Fed’s decision-making,” Innes added.
With information from AP and AFP
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