Lawmakers from both parties vow to block Trump's Fed pick amid Jerome Powell investigation

WASHINGTON, DC: Lawmakers from both parties threatened to block President Donald Trump’s nomination of a new Federal Reserve chair following confirmation that the Justice Department had issued subpoenas related to an investigation into current Chair Jerome Powell.

Powell said on Sunday, January 11, that the central bank had received grand jury subpoenas connected to his congressional testimony about renovations to the Federal Reserve’s Washington headquarters.

The development prompted sharp criticism from Democrats and several Republicans, who said that the probe raised concerns about political pressure on the central bank. Trump has denied any involvement in the investigation.

Lawmakers signal opposition to Trump's Fed nominee

Democratic lawmakers and a small number of Republicans criticized the Justice Department’s actions after Powell confirmed the subpoenas, with some saying that they would oppose any Federal Reserve nominee put forward by Trump until the matter was resolved.

“He is abusing the law like a wannabe dictator so the Fed serves him and his billionaire friends,” Senator Elizabeth Warren of Massachusetts wrote on X. “The Senate must not move ANY Trump Fed nominee.”

Senator Thom Tillis, a Republican from North Carolina, echoed similar concerns and said that he would block confirmation efforts.

“I will oppose the confirmation of any nominee for the Fed, including the upcoming Fed chair vacancy, until this legal matter is fully resolved,” Tillis said on Sunday.

“If there were any remaining doubt whether advisers within the Trump administration are actively pushing to end the independence of the Federal Reserve, there should now be none,” Tillis wrote separately.

“It is now the independence and credibility of the Department of Justice that are in question,” Tillis added.

Democratic Senator Mark Warner of Virginia said that the investigation reflected broader economic concerns.

“The administration’s latest attacks on Federal Reserve Chair Jerome Powell are just the most recent example of Donald Trump’s chaos-driven approach to the economy, and once again, it’s working Americans who will pay the price,” Warner wrote.

Representative Melanie Stansbury, a Democrat from New Mexico, said that the probe could have economic consequences.

“Donald Trump is now using DOJ to threaten the Fed chair,” she wrote. “Threats to an independent Fed impact market stability, inflation, costs, your retirement, and employment, things Americans cannot afford.”

Trump, speaking to NBC News, said that he was unaware of the probe. “I wouldn't even think of doing it that way,” Trump said. “What should pressure him is the fact that rates are far too high.”

He added that Powell “is certainly not very good at the Fed, and he's not very good at building buildings.”

Probe centers on renovation testimony and Fed independence 

Powell said that the Justice Department’s actions stemmed from his testimony before the Senate Banking Committee last June, which addressed the Federal Reserve’s multiyear renovation of its Washington headquarters.

The project’s estimated cost increased from $1.9 billion in 2019 to $2.5 billion in the Fed’s 2025 budget.

During his testimony, Powell rejected claims from Republican lawmakers that the renovations were excessive.

“The Federal Reserve takes seriously the responsibility to be a good steward of public resources,” the Central Bank said in a July statement, adding that the project would reduce long-term costs by consolidating operations.

Powell said that the probe was unrelated to oversight concerns.

“This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings,” Powell said. "Those are pretexts."

"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,” he alleged.