U.S. Attorney for the District of Columbia Jeanine Ferris Pirro speaks during a press conference at the Department of Justice in Washington, DC, US, on August 12, 2025.
Annabelle Gordon | reuters
President Donald Trump has repeatedly attacked the independence of the Federal Reserve. Friday’s dropping of the Justice Department’s investigation into Federal Reserve Chairman Jerome Powell won’t fully resolve the threat, although it will clear the way for the confirmation of Trump’s presidential nominee, Kevin Warsh.
“I think it would be foolish to conclude from this that the Fed is out of the woods,” said Lev Menand, a professor at Columbia Law School.
Warsh has long promised to keep the Fed independent, including at his nomination hearing on Tuesday. But it remains to be seen how he will hold up against a president who has said lowering interest rates was a litmus test for his nominee. Trump has not been shy about telling normally independent parts of the federal government what to do. The Fed is one of the few holdouts that is largely out of its control.
U.S. Attorney Jeanine Pirro said Friday she would close her investigation into cost overruns in Fed renewables projects and Powell’s testimony about them. Sen. Thom Tillis, R-N.C. has refused to allow Wersh’s nomination to proceed to a full Senate vote pending the investigation, because he sees it as a threat to the Fed’s ability to set interest rates independent of political considerations.
Tillis has not said whether he will abandon his resistance now that Pirro has withdrawn. Pirro said she wants to see the results of the Fed’s inspector general’s investigation. “I will not hesitate to reopen a criminal investigation if the facts warrant the need to do so,” she said in a statement. statement.
The prospect of Pirro potentially reopening the investigation could give the Fed pause, said Scott Alvarez, the Fed’s former general counsel. Pirro’s office told a judge in March that it had no specific evidence of wrongdoing that could support issuing the subpoena. The Feds would probably like to know what facts might cause Pirro to reopen the investigation.
Alvarez said, “I think because of the ambiguity in Pirro’s statement Jay may be concerned about harassment by the DOJ after leaving the Feds.” The Fed is probably trying to clarify this, he said.
The Fed declined to comment. Warsh did not immediately respond to a request for comment.
“The White House is as confident as ever that the Senate will ultimately confirm Kevin Wersh as the next Federal Reserve Chair to restore competence and confidence in Fed decision-making,” White House spokesman Kush Desai said in a statement. statement.
Trump nominated Powell in 2017 for the position he now holds, but the president soon became angry with him because he did not like the way Powell handled interest rates. During his first term in the White House, Trump considered firing Powell, but did not act.
In his second administration, Trump has gone even further. He has chided Powell for not cutting interest rates deeper, which Trump says would make it more expensive to finance the U.S. debt.
The Fed is charged with setting rates by law in an effort to best allow for full employment and low inflation. Countries where central banks have lost their independence, such as Türkiye, have seen a rise in inflation.
Pirro has said he acted independently in deciding to investigate Powell, but Trump has wholeheartedly supported the investigation. He has said that he believes the Fed’s renovation project involved “criminality”.
Trump said in August that he was removing Governor Lisa Cook from the Fed’s board over allegations that she was involved in mortgage fraud. He has fought those charges and the courts have allowed him to retain his seat while the case is pending in the Supreme Court. Powell participated in court arguments on Cook’s case in January. A decision on this may come by Wednesday.
Even if the court allows Cook to remain in office, the President could still seek to remove Powell later. Trump recently suggested he was considering doing so even if Wersch was confirmed as speaker. Powell can continue in his separate post as governor on the Fed’s seven-member board until January 2028.
“I have to fire him, OK? If he’s not leaving on time,” Trump said in an April 15 interview on Fox Business.
“This is a concerted effort to give the administration control over Fed policymaking,” Menand said. “This has been going on for a year, and the administration has adopted different strategies several times.”
Trump is unlikely to abandon his interest in the Fed under a new president. Trump will be disappointed if Warsh doesn’t lower rates quickly, the president told CNBC on the morning of Warsh’s Senate confirmation.
Warsh said at the hearing that it would be his and the Fed’s decision on where to set rates, no matter what Trump says. “I don’t believe that monetary policy independence is jeopardized when elected officials express their views on rates,” Warsh said. “Fed independence depends on the Fed.”
Trump can still make them prove it.