On January 9th, the chairman of the Federal Reserve – Jerome H. Powell – expressed that the Fed had been threatened with a federal indictment.  Part of an ongoing feud between Powell and Trump, Powell and the Federal Reserve have been facing investigation over a testimony given this past June regarding a renovation project to the Fed’s office buildings.

Chairman Powell disclosed that the Department of Justice (DoJ) has served the Federal Reserve subpoenas.  These subpoenas were followed by threats of the Indictment Threats, according to Powell.  They are both in supposed response to testimony he gave to a Senate committee in regards to a renovation project or the Federal Reserve office buildings.  and the allegations sparking the indictment are that the funds allocated for the renovation are being mismanaged.

However, Jerome Powell calls this move “unprecedented”.  Ana Faguy and Osmond chia write in this BBC article, “Powell said he believed it was opened due to Donald Trump’s anger over the Fed’s refusal to cut interest rates despite repeated public pressure from the president” (Chia, Faguy, Jan. 12, 26).  Many believe that the true cause is because of President Donald Trump believes that federal interest rates should go down. The Reserve controls interest rates depending on how the economy is functioning and what will be best for people.   President Trump has repeatedly expressed his desire for Powell and the Federal Reserve to lower interest rates far more sharply.  This move is, no doubt, an extreme escalation in that ongoing feud between Trump and Powell

The Federal Reserve acts as the central banking system of the United States.  And its control over interest rates is just one small facet of its larger purpose – control over the monetary system for the purpose of alleviating financial crises.  And, despite operating as a sect of the government, they are regarded as somewhat “independent”.  This is because they are not controlled by the executive or legislative branch, and are not funded by Congress.  This all is an extremely large factor in why there is concern about the potential of President Trump attempting to remove Chairman Powell from office.  If Powell leaves the position (as he is expected to in May), the President is likely to choose a successor to take his place.  This successor could be someone who responds to the wishes of the President, and might lower interest rates despite how the economy and market are doing, in order to lower the federal debt.

A New York Times Article quotes Powell, “‘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,” Mr. Powell added. “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'” (Smith, thrush, Jan. 11.).