Trump's attack on Powell

The Hill - Senate Republicans are rushing to defend Federal Reserve Chair Jerome Powell from a Department of Justice (DOJ) criminal investigation that Powell says is politically motivated and aimed at undercutting the Fed’s independence.

GOP lawmakers are challenging the Trump administration’s investigation of Powell a week after five Republican senators voted to advance a war powers resolution to bar Trump from taking military action against Venezuela without congressional authorization.

The loudest warning shot against the White House came from Sen. Thom Tillis (R-N.C.), a senior member of the Senate Banking Committee, who accused Trump’s advisers of deliberately trying to undercut the Fed’s independence and threatened to block the president’s nominees to the Fed until the investigation is “fully resolved.”

He said the criminal probe into Powell’s testimony before Congress last year over the $2.5 billion renovation of the Fed’s headquarters in Washington raises questions about the “independence and credibility of the Department of Justice.”

Bloomberg - Global central bankers threw their support behind Jerome Powell, saying they “stand in full solidarity” with the Fed.

NY Times -   A criminal investigation into whether Mr. Powell lied to Congress, revealed by The New York Times on Sunday, has prompted the central bank to jettison its cautious approach and fight. The battle’s outcome could determine whether the Fed remains an independent entity.

“Trump is now exercising the nuclear option, so there is no longer a reason for Powell not to speak his mind,” said Maurice Obstfeld, a senior fellow at the Peterson Institute for International Economics, who was formerly the chief economist at the International Monetary Fund.

Mr. Powell’s decision to push back, which came in a rare video message on Sunday evening, tees up the most challenging moment in his roughly eight years at the helm of the central bank. Mr. Powell, whose term as chair ends in May, must now decide how hard to continue fighting and whether to remain in his role as a governor, a term that is set to expire in 2028.

The Guardian - Ex-Fed chairs Alan Greenspan, Ben Bernanke and Janet Yellen warned similar prosecutorial attacks in other countries had led to “highly negative consequences” for the cost of living – and argued they had “no place” in the US.

On Tuesday, nine central bank governors – including the governor of the Bank of England and the chair of the European Central Bank – issued a joint statement offering “full solidarity” to Powell.

Hayes Brown, MS NOW - The Trump administration’s legal threat against Federal Reserve Board Chairman Jerome Powell is as unprecedented as it is ham-fisted. Powell revealed in a video statement Sunday that the Justice Department had opened a criminal investigation into him over the renovations of the Washington headquarters of the independent agency he runs. Although everyone can see through the stated reason for the lawsuit to the president’s obsession with interest rates — which Powell articulated sharply — it’s startling that the Justice Department is willing to risk colossal damage to the U.S. economy to further President Donald Trump’s agenda. Especially considering it still might not even accomplish the latter.

As a criminal matter, the investigation makes little sense. Federal prosecutors are examining whether Powell lied to Congress about the scope of the project or did not obtain the proper permits to undertake the $2.5 billion renovations, The Wall Street Journal reported. The project has run over budget, but the Fed has been transparent about where the additional costs have come from, and which features from an earlier proposal that drew criticism had been nixed. It’s hard to see how benefit Powell could have benefited from this situation.