A media outlet asked whether an agency outside the Justice Department could investigate Powell and the related costs for the Federal Reserve's renovation project. Trump responded, "Yes, it's simple." This statement implies that Trump has not given up on holding Powell accountable, but leaves room regarding the investigating entity. This dynamic is directly related to the confirmation process of Kevin Warsh, the candidate for Federal Reserve chairman nominated by Trump. North Carolina Senator Thom Tillis previously vowed to block Warsh's nomination until the investigation into Powell is resolved.

Written by: Bu Shuqing

Source: Wall Street Insights

Trump hinted at considering alternative ways outside the Justice Department to investigate current Federal Reserve Chairman Powell. This move might provide a way out of the current political deadlock surrounding the leadership changes at the Federal Reserve, but concerns over the central bank's independence have not dissipated.

According to media outlet Semafor, during an interview on Thursday, Trump responded to a question about whether an agency outside the Justice Department could investigate Powell and the costs related to the Federal Reserve's renovation project, stating, "Yes, it's simple." This response indicates that Trump has not abandoned the intention to hold Powell accountable but leaves room regarding the investigating entity.

This dynamic is directly related to the confirmation process of Kevin Warsh, Trump’s nominee for Federal Reserve chairman. North Carolina Senator Thom Tillis previously vowed to block Warsh's nomination until the investigation into Powell is resolved. Tillis holds a key vote on the Senate Banking Committee, and his position is crucial for Warsh’s successful confirmation. It remains unclear whether Trump's latest statement can break the deadlock.

Congressional Investigation May Be a Compromise Solution

Earlier this month, Tillis stated that he would welcome a congressional investigation if it could prompt the Justice Department to drop the investigation into Powell.

This statement provides potential compromise space for all parties—shifting the investigation from the executive branch's Justice Department to the legislative body might somewhat respond to Tillis's demands while also allowing Trump to continue exerting pressure on Powell.

However, it remains unclear whether this alternative solution is sufficient to persuade Tillis to change his position, thereby clearing obstacles for Warsh’s confirmation vote.

Renovation Cost Dispute Becomes Focus of Investigation

Trump again mentioned the Federal Reserve's building renovation project in the interview, stating that the associated costs are high and suggesting that there are issues involved.

"You have to figure out where the problem is," he said, "That building was originally beautiful, and they tore it down, probably because the renovation costs were too high."

This controversy stems from the cost issues of the Federal Reserve headquarters renovation project and Powell's related testimony to Congress. The Trump administration had previously initiated a Justice Department investigation and tied it to the political maneuvering to block Warsh's confirmation.

Powell’s Position Remains Uncertain, Trump Threatens to Fire

Powell's current term as Federal Reserve chairman will expire in mid-May.

He previously stated that as long as the Justice Department investigation is ongoing, he would continue to stay on as a board member at the Federal Reserve after his term ends; if Warsh is not confirmed by then, he would continue to serve in an acting chairman capacity.

In response, Trump stated that if Powell does not "timely" leave the Federal Reserve, he might fire him.

Trump's series of actions against the current Federal Reserve chairman has raised alarms within Congress, with several lawmakers expressing concerns that the independence of the central bank is at risk. Analysts point out that if the Federal Reserve's independence is significantly eroded, it could have far-reaching effects on the U.S. economy and potentially trigger extreme volatility in financial markets.