The Justice Department examination concerns possible perjury by Powell. According to multiple sources familiar with the matter, the probe is being handled by the office of U.S. Attorney Jeanine Pirro, a close ally of the president and former television host. Powell acknowledged the investigation in a written statement on Sunday, saying he would cooperate but adding that the action occurs amid sustained pressure on the Fed from the administration.
Powell, a former investment banker who joined the Board of Governors in 2012 and became chair in 2018, has faced repeated criticism from Trump for keeping interest rates above levels the president considers appropriate. Market participants have watched the evolving tension closely because any perceived political interference could influence expectations for monetary policy and financial stability.
Beyond the chairmanship, other seats at the central bank are approaching turnover. Governor Stephen Miran’s term ends in January, and speculation continues that Vice Chair Philip Jefferson may step down before his own term concludes. If those vacancies emerge alongside the open chair position, Trump could be in position to select three of the seven governors, a scenario that would significantly reshape the policy-setting Federal Open Market Committee. Tillis’s blockade, however, places that timetable in question.
The North Carolina senator, who plans to retire at the end of his current term, generally supports the president’s agenda but has occasionally broken with party leaders. For example, he was one of only two Republicans who voted against a sweeping spending package last year. His decision to hold up Fed nominations adds another instance of dissent.
Democrats on the banking panel voiced similar concerns about the investigation. Senator Elizabeth Warren of Massachusetts described the administration’s move as an attempt to install a pliant successor who would quickly reduce interest rates. Warren has been a long-time critic of Powell, opposing his renomination in the past, yet she joined Tillis in urging the committee to halt confirmation proceedings until the legal matter concludes.
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The White House has spent recent weeks narrowing a shortlist of candidates for the chairmanship and continues to vet potential nominees for the broader board. An official announcement had been expected before the end of the month, but Tillis’s declaration may force the administration to reassess its strategy.
Analysts note that a prolonged impasse could leave the Fed operating with fewer than its full complement of governors at a time when the economy faces elevated inflation and questions about growth prospects. Under the Federal Reserve Act, a sitting governor can serve the remainder of a 14-year term even if that individual’s term as chair lapses, giving Powell the option to remain on the board in a diminished capacity should no successor gain Senate approval.
Authority over monetary policy resides in the Federal Open Market Committee, which combines the seven governors with five regional bank presidents. While the chair sets the agenda and represents the institution publicly, decisions are reached by majority vote. Further vacancies could shift the balance of that voting body and shape the trajectory of interest rates, asset purchases and regulatory oversight.
Legal experts observe that perjury investigations of sitting Fed chairs are exceedingly rare. The Justice Department has not publicly commented, and it remains unclear how long the inquiry might last or what evidence prompted the allegation. If the probe is closed without charges, Tillis could lift his hold, clearing the path for Senate consideration. Conversely, an extended investigation might leave critical Fed positions unfilled well into next year.
For now, stakeholders in the financial community are watching both Capitol Hill and the Justice Department for further developments. The Federal Reserve’s policy direction, already under pressure from inflation data and global economic uncertainty, is poised to enter a period of heightened political scrutiny. An overview of the central bank’s structure and statutory mandate can be found on the Federal Reserve’s official website.
Crédito da imagem: CNBC
