Two things can be true at once: Many American presidents have wanted a more compliant Federal Reserve. And President Donald Trump’s pressure campaign against Fed Chair Jerome Powell has taken tactics to a disturbing level — further eroding the Justice Department’s traditional independence.
The issue is no longer simply Powell, or Trump’s preferences on interest rates or even Fed independence in the abstract. What became unmistakable this week was that a criminal investigation of Powell has been used as a political weapon, abusing prosecutorial powers.
Simply put, prosecutors were never meant to be part of a president’s plan to break the Fed.
Prosecutors were never meant to be part of a president’s plan to break the Fed.
Powell’s term as Fed chair ends on May 15. But he holds a separate tenure on the Federal Reserve Board of Governors that runs through Jan. 31, 2028. So he could remain at the central bank after a successor takes over. In an interview broadcast Wednesday, Trump said, “I’ll have to fire him” if Powell does not step aside from the board when his term ends. Meanwhile, federal prosecutors arrived at a Fed building renovation site without warning.
Those seemingly disparate facts form an ominous truth about how the administration has attempted to force out an independent Fed chair.
The world — and global markets — were shocked to learn in January that the DOJ had opened a criminal investigation into Powell purportedly over renovations of historic Fed buildings in Washington. White House officials have alleged that Powell made false statements to Congress over the $2.5 billion project’s costs or failed to comply with permitting regulations.
In a video statement in January, Powell was unusually blunt, saying, “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.”
The Wall Street Journal’s analysis of Powell’s decision to disclose the investigation noted, “The threat of the prosecution of a sitting Fed chair would be material information for investors or anyone else trying to understand the forces shaping interest-rate deliberations.”
Renovations can run over cost, of course, and large public projects can be mismanaged. Prosecutors are entitled to investigate credible evidence of fraud, corruption or intentional deception. But that is precisely the difficulty here: The public record suggests the legal basis for this investigation is weak.
In March, a federal judge quashed subpoenas directed at Powell with unusually terse language. A “mountain of evidence” suggested “the Government served these subpoenas on the [Federal Reserve] Board to pressure its Chair into voting for lower interest rates or resigning,” Chief Judge James E. Boasberg of the U.S. District Court for the District of Columbia wrote.
Prosecutors “produced essentially zero evidence to suspect Chair Powell of a crime,” he added, calling the case “so thin and unsubstantiated that the Court can only conclude that they are pretextual.”
The court did not merely reject the subpoenas on a technical ground. It identified the broader political campaign against Powell as part of the legal problem.
Trump’s criticism of Powell over interest rates dates back to his first term. But this is not merely pressure over monetary policy. While Trump was publicly threatening Powell’s future at the Fed, prosecutors’ unannounced arrival at the Fed construction site suggested prosecutorial pressure will remain part of the campaign until the dispute is resolved on terms the president prefers.
A criminal investigation is supposed to determine whether a crime occurred. It is not supposed to become a cloud kept in place because the cloud itself is useful.
And the criminal investigation is hanging over more than Powell. Trump has named Kevin Warsh as his choice for the next Fed chair. But Powell has said he intends to remain on the Fed board until the investigation is over, and Sen. Thom Tillis, R-N.C., a member of the Senate Banking, Housing and Urban Affairs Committee, has said he will not vote to confirm Warsh until the DOJ’s probe of Powell is closed. The unresolved criminal probe has become entangled with the leadership transition.
Prosecutors wield extraordinary authority. That authority is justified by the expectation that it will be used for law-enforcement purposes, not as a political instrument against independent actors the president wants removed. This situation has all the problems that accompany selective prosecution as well as the more subtle but equally corrosive use of unresolved criminal process to wear down resistance, damage credibility and make institutional independence more difficult to sustain.
That is why this story is bigger than Powell. The danger is not just what happens to one Fed chair. It is the precedent set when a criminal investigation can be kept alive because the pressure it creates is politically useful. Once that line is crossed, other officials and institutions with legal independence become vulnerable to the same tactic. And the boundary between prosecution and politics becomes less real, less enforceable and easier to cross the next time.
The administration has also gone to the Supreme Court to remove another Fed governor, Lisa Cook, before her Senate-confirmed term runs out. The high court has allowed Cook to keep her seat while the justices consider how much power a president has to force out Fed officials. That underscores that this is not just a feud over interest rates but part of a larger effort to break down the legal protections that keep the Fed independent.
Past presidents have attacked the Fed, and public institutions are not above scrutiny. But the criminal process cannot become a tool for forcing institutional submission or the mechanism by which independence is made untenable. And one that does so where the strategic value of the investigation appears to exceed its legal merit further corrodes the DOJ’s independence and our broader national commitment to the rule of law.
The threat to fire Powell is serious enough on its own. The deeper problem is a government willing to use the pressure of criminal process to make that threat stick.
Duncan Levin is a criminal defense attorney and former federal prosecutor who serves as a Lecturer on Law at Harvard Law School and is a frequent contributor to MS NOW.