No plans to leave Fed until justice department investigation over: Powell

By Catarina Saraiva

 

Federal Reserve Chair Jerome Powell said he plans to stay at the central bank until a Justice Department investigation into him and the central bank is complete. 

 

“I have no intention of leaving the board until the investigation is well and truly over, with transparency and finality,” Powell said Wednesday at a press conference.

 

The comments marked the first time Powell has given any public indication about how the DOJ probe might affect his plans to remain at the Fed. The investigation has stirred speculation in recent months that he might continue serving his term as a governor, which runs until 2028, after his term as chair expires in May. Powell added that he had not yet made a decision about whether he will continue to serve out his full term as a governor after the DOJ investigation ends. 

 

 

“I will make that decision based on what I think is best for the institution and for the people we serve,” he said. 

 

The DOJ in January issued subpoenas to the Fed as part of an investigation into cost overruns in a building renovation project. In a statement at the time, Powell called the reasons for the investigation pretexts and said the probe was really triggered by the Fed’s refusal to set interest rates based on President Donald Trump’s demands.

 

The subpoenas were blocked by a federal judge earlier this month, but the DOJ said it would appeal that decision.

 

Court papers released alongside that decision revealed that Powell felt compelled to stay on at least until the legal process was completed. “To defend the Federal Reserve’s independence, Chair Powell could not resign while the criminal investigation is pending,” the Fed’s lawyers said in a filing.

 

Trump, who has long implored both Powell and the Fed to lower interest rates aggressively, has nominated a replacement for Powell, former Fed Governor Kevin Warsh. But that process has been delayed by some Republicans in the Senate, who have balked at the investigation. Thom Tillis, a Republican from North Carolina, has said he won’t vote to advance Warsh’s nomination until it’s fully resolved.

 

In the case that Warsh’s confirmation is delayed, Powell said that he would continue to serve as chair pro-tempore, as he did for a few months in 2022 as he awaited Senate confirmation for his second term as chair. 

 

“If my successor is not confirmed by the end of my term as chair, I would serve as chair pro-tem until he is confirmed,” he said. “That is what the law calls for.”

 

Powell would also be eligible as a governor to remain in charge of the rate-setting Federal Open Market Committee, potentially extending his influence over monetary policy.

 

White House spokesman Kush Desai responded to a request for comment by saying the administration “is working closely with Congress to swiftly confirm Warsh and restore confidence, competence and credibility to the Federal Reserve.”

 

The Fed on Wednesday held its benchmark policy rate in a range of 3.5% to 3.75% for a second consecutive time, as officials acknowledged increased economic risks tied to the war in the West Asia.