Jerome Powell, chair of the Board of Governors of the Federal Reserve – the body that sets interest rates in the US – has hit back at threats of criminal investigation issued Friday by the US Department of Justice, calling them “pretexts” for undermining the Fed’s independence from presidential control.
Powell took the unusual step of releasing a video statement Sunday saying the Fed had been served with grand jury subpoenas on Friday threatening a criminal indictment related to his testimony before the Senate Banking Committee last June.
In that hearing, Powell answered questions about an ongoing $2.5bn project, dating back to 2017, to renovate two historic Federal Reserve office buildings. The project is reported to be around $700m over budget, which the Trump administration has used to criticise Powell, whom the president wants to replace.
During his second term in office, Trump has been pressuring Powell to lower interest rates but Powell, whom Trump appointed in his first term, has refused to bow to political pressure, saying he would only lower rates if inflation and other factors allow.
‘No one is above the law’
“I have deep respect for the rule of law and for accountability in our democracy,” Powell said yesterday. “No one—certainly not the chair of the Federal Reserve—is above the law. But this unprecedented action should be seen in the broader context of the administration’s threats and ongoing pressure.
“This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings. It is not about Congress’s oversight role; the Fed through testimony and other public disclosures made every effort to keep Congress informed about the renovation project. 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.
“This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions—or whether instead monetary policy will be directed by political pressure or intimidation.
“I have served at the Federal Reserve under four administrations, Republicans and Democrats alike. In every case, I have carried out my duties without political fear or favor, focused solely on our mandate of price stability and maximum employment. Public service sometimes requires standing firm in the face of threats. I will continue to do the job the Senate confirmed me to do, with integrity and a commitment to serving the American people.”
Built in the 1930s
The large office buildings in Washington, DC – the Marriner S. Eccles Building and the 1951 Constitution Avenue Building – were both built in the 1930s and have had no major refurbishment since.
The comprehensive overhaul involves removing asbestos and lead contamination; replacing old electrical, plumbing, heating, ventilation, air conditioning, and fire safety systems; and major structural work to bring the buildings up to modern code, including current accessibility, security, and safety standards.
In response to the Trump administration’s criticisms, the Fed published a fact sheet about the projects on its website.
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