This statement, which the central bank posted on its website, amounted to an unprecedented repudiation of a President by a sitting Fed chair. It caused a political eruption—and not just among Democrats. For once, some elected Republicans spoke up. Remarking that the subpoenas had thrown into doubt the “independence and credibility of the Department of Justice,” Senator Thom Tillis, who sits on the Senate Banking Committee, vowed to block any new nominations to the Fed, including a potential replacement for Powell, whose term as chair ends in May. Senator Lisa Murkowski, the Alaska Republican, publicly backed Tillis’s stance and suggested that Congress should investigate the Justice Department. Even John Thune, the Majority Leader in the upper chamber, voiced disquiet, saying that the allegations against Powell had “better be real.”
It soon emerged that Trump’s Treasury Secretary, Scott Bessent, also had reservations, if not for the same reasons. After learning of the subpoenas on Friday evening, Bessent reportedly called Trump and told him that they would create difficulties in Congress—an accurate prediction, it turned out—and could also make it more likely that Powell would decide to stay on after May as an ordinary member of the Fed board, an option he can exercise because his term as a regular governor doesn’t expire until January, 2028. If Powell did remain on the board, it would deny Trump the opportunity to appoint another governor more amenable to his wishes.
Not for nothing did the conservative editorial board of the Wall Street Journal describe the criminal investigation of Powell as “lawfare for dummies.” Trump insisted that he didn’t know anything about the subpoenas. So did Bill Pulte, the Florida housebuilder who now serves as the director of the Federal Housing Finance Agency, and who was a key instigator of the trumped-up mortgage-fraud charges against another Fed governor, Lisa Cook, which Trump used to issue an order firing her. (The Supreme Court is due to hear that case next week.) The denials from Trump and Pulte would perhaps be a bit more believable absent a Washington Post report that the two of them recently dined at Mar-a-Lago and that Pulte brought along with him a mocked-up “Wanted” poster featuring an image of Powell. (In a post on X, Pulte denied that the meeting happened.)
Pirro seems to have been assigned the role of fall gal. Someone, presumably at the Justice Department, let it be known that Pirro hadn’t informed the higher-ups there before issuing the subpoenas. An unnamed Administration official told Axios that Pirro “went rogue.” This, even though she’s known Trump for decades and surely took her cues from his attacks on Powell. Just last week, Trump criticized a group of U.S. Attorneys at the White House for not moving fast enough in prosecuting his favored targets, the Journal reported. Pirro, for her part, blamed the victim, claiming that the Fed hadn’t replied to her office’s requests for information. “None of this would have happened if they had just responded to our outreach,” she said.
A likely story. As President, Trump is free to criticize the Fed’s interest-rate policies—counterproductive as such a step usually proves—and even to argue that the Administration should have more say in the central bank’s policy deliberations, as it did before the Treasury-Fed Accord of 1951, which separated debt management (the Treasury’s preserve) from monetary policy (the Fed’s bailiwick). But the Fed is an independent agency that operates under the oversight of Congress and the gaze of the financial markets. To change how it works and impose his will, Trump would need the acquiescence of both, which he surely wouldn’t get, and for good reason. The criminal inquiry into Powell smacked of “how monetary policy is made in emerging markets with weak institutions, with highly negative consequences for inflation and the functioning of their economies more broadly,” a bipartisan group of former Fed chairs and White House economic advisers pointed out in a statement this week. To put it another way, would you trust Trump to set interest rates?
The authoritarian aspect is glaring. In using cost overruns as a pretext for going after Powell criminally, the Trump Administration demonstrated, yet again, its contempt for the institutions of governance and the legal system. Powell deserves credit for fighting back. On receiving the subpoenas last week, he could theoretically have responded with a bland statement that the Fed would coöperate with any legitimate inquiry, and, meanwhile, get on with its work. With his job up in a few months, that would have amounted to keeping his head down again and relying on the courts to strike down any indictment that might come in the future. Instead, he took the advice that he issued to the Princeton class of 2025 in a baccalaureate address last May: “Throw yourself into the deep end of the pool. . . . Take risks.”
The seventy-two-year-old Fed chair put to shame the heads of law firms, universities, and public companies who have caved to the White House. He also demonstrated that, at least in the economic arena, there are still some institutional constraints that Trump cannot sweep aside, or not easily. Tragically, these guardrails are being trampled underfoot in other areas, including the streets of some American cities, where Trump’s immigration police are running amok. Compared with that outrage, a U.S. Attorney issuing subpoenas to the Fed may seem like a matter of minor import, but it’s part of the same larger phenomenon: Presidential abuse of power. And, in his own way, Jay Powell is standing up to it. ♦