Fed Chair Jerome Powell turns whistleblower against Trump

Late Sunday evening, Federal Reserve Chair Jerome Powell rang the alarm for the men who run America’s largest corporations, banks and consultancies and are convinced that Donald Trump’s authoritarianism is just another variable to be modeled, hedged or arbitraged. In a video statement, the Republican Powell hit back against the Justice Department’s political weaponization against the Federal Reserve’s independence. 

On Friday evening, the Justice Department served the Fed with grand jury subpoenas, threatening criminal indictment against Powell for his June testimony before the Senate Banking Committee about the bank’s building renovation project. The official pretext for the subpoenas is whether Powell accurately characterized details about a $2.5 billion renovation of the Fed’s Washington headquarters. The real reason, which the chair stated plainly in his extraordinary message, is that he refused to lower interest rates as quickly as Trump demanded. 

Let’s be absolutely clear about what’s happening here. Powell is being punished for ​​refusing to bend monetary policy to the whims of an authoritarian president who believes the entire machinery of government exists to serve his personal interests and ambitions.  

Even by Trump’s standards, the brazenness of this assault is staggering. The Federal Reserve was deliberately designed to be independent to avoid exactly this scenario. The Banking Act of 1935 created the modern structure of the Fed and explicitly placed monetary policy decisions beyond presidential reach. Central banks in nearly every major democracy operate on the same principle of independence — precisely because the alternative could lead to inflation and instability. Trump has never accepted the basic premise that the Fed was designed to be independent of presidents to avoid political business cycles and cronyism. The idea that someone else can say no to him — as Powell has in the past by refusing to take action on the economy according to Trump’s whims — is intolerable, so, true to form, the president has escalated.

Trump has been ramping up his attacks on Powell for months. He has called for the Fed chair to be fired, accused him of incompetence, mocked him publicly and repeatedly demanded lower interest rates as if the Federal Reserve exists simply to do the boss’ bidding. When Powell refused to comply, Trump and his enablers went searching for a pretext to exact revenge. They found it in the building renovation project. 

Andrew Levin, a Dartmouth economist and former Federal Reserve official, first published a policy brief on the central bank’s building renovations for the libertarian think tank Mercatus Center. After Trump allies pounced, the report became fodder for a New York Post story sneering about a supposed “Palace of Versailles.” The Fed, for its part, kept Congress informed about the project, with Powell testifying at a Senate hearing that the renovation included no VIP dining room, no new marble, no special elevators, no water features and no roof terrace gardens. 

But facts don’t matter when the goal is intimidation. Enter Bill Pulte, director of the Federal Housing Finance Agency, a Trump loyalist who has been a driving force in weaponizing the federal government against the president’s perceived enemies. Pulte, who echoes Trump’s complaints about high borrowing costs and traveled to Mar-a-Lago this weekend with the president, urged lawmakers to investigate Powell’s testimony and submitted a criminal referral to the DOJ. Rep. Anna Paulina Luna, R-Fl., another MAGA zealot, formally referred Powell to Attorney General Pam Bondi for potential perjury and false statements. Former Fox News personality and Trump sycophant Jeanine Pirro, now serving as U.S. Attorney for the District of Columbia, signed off on this investigation. Trump visited the construction site, theatrically inspecting it like a mob boss checking on a wayward subordinate. When Trump claimed Powell was working on an additional building, the fed chair replied in front of the gathered press. “It’s a building that was built five years ago…it’s not new.”

Pulte was also behind the administration’s attempt to fire Fed Governor Lisa Cook based on spurious mortgage fraud allegations that Cook has repeatedly denied. The Supreme Court is set to hear that case later this month — and ultimately bears enormous responsibility for enabling this crisis. Chief Justice John Roberts and the conservative majority ruled that Trump is above the law, that presidential immunity shields him from consequences for his actions. They created the legal framework that allows the president to believe he can do anything without accountability. And now they will have to decide whether to stand by while Trump destroys the Fed’s independence. Powell would have been wise to forcefully defend Cook immediately as it obviously a pretext for Trump’s attacks on the institution.

Want more sharp takes on politics? Sign up for our free newsletter, Standing Room Only, written by Amanda Marcotte, now also a weekly show on YouTube or wherever you get your podcasts.

For his part, Trump denied any knowledge of the Powell investigation in an interview with NBC News on Sunday, claiming “I don’t know anything about it” while in the same breath attacking Powell as “not very good at the Fed” and “not very good at building buildings.” But as Sen. Chris Murphy, D-Conn., pointed out, “The media has no obligation to report what” Trump says as straight news. 

Ironically, the very rates Trump is obsessed with are the ones least susceptible to his bullying. If investors start to believe the Fed is a political plaything, they will demand a premium. Rates will go up, not down. The market will punish the behavior Trump is trying to coerce, as Bank of America CEO Brian Moynihan told CBS News’ Margaret Brennan last month.

Since the Fed is self-financing and the building’s renovation won’t cost taxpayers a dime, the point of the Justice Department’s subpoenas. isn’t to win a conviction. The administration is using the process itself as punishment to send a message that defying Trump comes with consequences, and to terrorize anyone who might consider standing up to presidential overreach. By going straight to the public, Powell stands almost alone among establishment figures with real power. He has now said plainly, out loud and on the record, what is actually happening in America.

What makes this moment particularly dangerous is that it’s part of a broader pattern of authoritarian escalation. Trump has invented imaginary laws requiring 10% credit card interest rates. He has threatened to keep ExxonMobil out of Venezuela because its CEO was insufficiently enthusiastic about the administration’s plans, saying they were “playing too cute.” He has weaponized the Justice Department to go after political enemies, journalists and now the chair of the Federal Reserve. These are all part of a visible and detectable acceleration of tension and dark forces at play.

For years now, America’s leading executives have either toadied up to Trump or kept conspicuously silent. The yawning chasm between the bravery of ordinary people placing themselves at physical risk trying to protect their neighbors and exercise their First Amendment right compared to the cowardice, silence and capitulation by elites is astonishing, if not surprising. On Sunday, Powell took the first step to bridge that gap. 

Powell’s chairmanship ends in May, but his term as a Fed governor runs until 2028. Traditionally, chairs step down entirely. But if Powell is genuinely worried about the Federal Reserve’s independence, he could decide to stay on. Attacking him with a trumped-up investigation all but invites that outcome. 

Instead of clearing the field for a loyalist, Trump may have ensured that a defiant guardian of institutional norms remains inside the building for years to come.