President Donald Trump insists he is not involved in the criminal investigation by the U.S. attorney for the District of Columbia into the actions of Federal Reserve Chairman Jerome Powell. But the president has openly claimed “absolute” control over the Justice Department. Training federal prosecutors on Powell fits Trump’s pattern of pressuring the Fed and going after opponents, and is also an unprecedented assault on the Fed’s independence. The administration should end the investigation at once.
Trump has been pressing Powell to cut interest rates since the third day of his second term, steadily ratcheting up public pressure as the Fed chairman has refused to do his bidding. The criminal investigation into Powell stems from testimony he gave to Congress last June. Under questioning from the Senate Banking Committee about the Fed’s renovation of its Washington D.C. headquarters, Powell testified that the plans for the project included “no VIP dining room,” “no new marble,” “no special elevators,” “no new water features,” and “no roof terrace agenda.”
Two weeks later, White House Office of Management and Budget Director Russ Vought sent Powell a letter claiming that the plan for the Federal Reserve headquarters on file with the National Capital Planning Commission differed from Powell’s testimony. “Your testimony appears to reveal that the project is out of compliance with the approved plan with regard to major design elements,” Vought wrote, noting, “This administration takes this matter very seriously.”
Powell replied to Vought a week later, arguing that the Federal Reserve was not legally required to seek approval from the NCPC, though it had voluntarily submitted its plans. He also acknowledged that the current design differs from what was filed with the commission, but maintained that the changes were not “substantial” enough, in the Fed’s view, to require additional NCPC review.
The Trump administration’s decision to open a criminal investigation into this dispute is richly ironic, as Trump himself has declined to file plans for his White House ballroom with the NCPC before he demolished the East Wing. As we argued at the time, Democratic Party hyperventilating about NCPC compliance was misguided in that case, but the same applies to Trump’s insistence on strict compliance with the NCPC at the Fed. Yes, Fed headquarters is over budget, but every change the Trump administration is accusing Powell of making would have made the project less, not more, expensive. If we are to take this investigation at face value, which would be a naive thing to do, Powell is essentially being attacked for trying to save taxpayers’ money without getting proper approval from the local zoning board. This is not worth anybody’s time.
Unfortunately, as Powell warned in a rare statement Sunday, the investigation cannot be accepted at face value. Concerns about the Fed renovations and Powell’s related testimony, he said, are merely “pretexts,” and 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.”
A separate statement issued Sunday by eight former Fed chairs and Treasury secretaries, including Ben Bernanke, Alan Greenspan, and Henry Paulson, echoed that view. “The reported criminal inquiry into Federal Reserve Chair Jay Powell is an unprecedented attempt to use prosecutorial attacks to undermine” the Federal Reserve’s independence, they wrote.
That fear is well-founded. The investigation of Powell comes amid a broader pattern in which Trump has treated the Justice Department as a weapon in his political armory. The prosecutions and investigations of figures such as Fed Gov. Lisa Cook, former FBI Director James Comey, and New York Attorney General Letitia James follow the same template — use prosecutorial power to punish or intimidate the president’s critics and rivals.
To be sure, Democrats’ hands are dirty, too. The Biden administration abused the federal justice system to pursue Trump personally and to target many of his supporters. But one party’s misuse of the Justice Department does not justify the other party doing the same.
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Trump has said that he respects the Fed’s independence, and his administration has echoed that principle in court. In Trump v. Slaughter, it argued that the Federal Reserve is a unique, semi-private entity, structurally distinct from ordinary executive branch agencies and therefore not subject to the same direct presidential control.
If Trump respects that independence, he should act like it. That means ending his public pressure campaign against Powell and ending this prosecution.