WASHINGTON – In a House Financial Services committee hearing Wednesday, representatives repeatedly criticized the Trump administration’s criminal charges against Federal Reserve Chair Jerome Powell.
Although the Task Force on Monetary Policy, Treasury Market Resilience, and Economic Prosperity was scheduled to discuss the Fed’s balance sheet, the committee’s top Democrat, Rep. Maxine Waters, D-Calif. wasted no time on the topic.
“I would love to engage with you about the balance sheet,” she said. But “we should not be talking about anything but the independence of the Fed.”
Coming just days after the Trump administration opened an investigation into Powell and he uncharacteristically responded, one representative after another from both parties expressed repeated concern over Trump’s pressure on Powell and the Department of Justice’s subpoenas and threat of criminal indictment.
In his opening remarks, Financial Services Chair French Hill, R-Ark., said he believed the executive branch was attempting to direct the Fed and defended Powell’s unwavering bipartisanship.
“I want to emphasize, Jerome Powell is a man of integrity,” Hill said.
The top Democrat on the task force, Juan Vargas, D-Calif. said it would be “irresponsible” to not discuss Trump’s attempted criminal charges against Powell before addressing the balance sheet.
“I think for me, it would be irresponsible not to talk about the possible criminal prosecution of the [Fed] chairman.”
Vargas compared Trump’s involvement with the Fed to former President Richard Nixon pressuring then-Fed Chair Arthur Burns to cut rates in the 1970s.
Task force member Janelle Bynum, D-Ore., said the independence of the Fed is at risk.
“The Fed, which our committee oversees, I believe, is under attack by the Trump administration,” Bynum said. “The American people cannot afford for us to sit around talking about our balance sheets.”
Committee member Cleo Fields, D-La., said it was necessary to address what he described as an unprecedented presidential pursuit of criminal charges against a government official.
“If a person as nonpartisan as Chairman Powell can be subject to these accusations, is there anyone in our government who is truly safe from criminal prosecution?” Fields said. “That’s what we’re really dealing with today.”
Trump has consistently criticized Powell for failing to cut interest rates more quickly. On Tuesday morning, the Bureau of Labor Statistics released data on the consumer price index. Inflation rose by a 2.7% annualized rate in December, which is consistent with the reported 2.7% annualized rate in November.
Trump responded to this report on Truth Social, calling on Powell to cut interest rates following the report of “great (LOW!) inflation numbers.”
He reaffirmed this sentiment in Detroit on Tuesday, when speaking at the Detroit Economics Club, by stating that inflation was “way, way down,” according to the New York Times.
However, inflation remained above the Fed’s goal of 2%.
Sen. John Kennedy, R-La., who sits on the Banking Committee, told reporters on Tuesday that tensions between the Fed and Trump are going to unsettle the bond market and therefore, interest rates.
“The quickest way to unsettle the bond market would be to have the Federal Reserve and the executive branch of government start suing the bejesus out of each other,” Kennedy said. “If that happens, interest rates will go up and the dollar will go down. And that’s a very unhappy circumstance.”