Trump Threatens to Fire Fed Chair Powell Over Criminal Probe Standoff

Political Standoff Intensifies

President Donald Trump threatened to fire Federal Reserve Chair Jerome Powell if he remains at the central bank beyond the end of his term in May, escalating the president's yearslong conflict with the central bank . "Then I'll have to fire him," the president said during an interview on Fox Business . "I've held back firing him. I wanted to fire him, but I hate to be controversial. I want to be uncontroversial."

Powell's term as chair ends May 15, though his term as governor does not expire until 2028 . Powell's term as Fed chairman is set to expire in mid-May, but he's promised to stay on the job until a successor is confirmed and he's said he will not step down until the Justice Department resolves its probe of cost overruns at the Fed's headquarters renovation project .

Criminal Investigation Complicates Succession

The chair said the investigation centered on his testimony about the renovation project, which has cost about $2.5 billion so far . "Any construction project that has cost overruns of almost 80% over the original construction budget deserves some serious review," Pirro said in a statement . A federal prosecutor in Washington, DC, told a judge this month that his office didn't have evidence of any crimes by Federal Reserve Chair Jerome Powell in a costly renovation of the central bank's headquarters – despite subpoenas over the matter, which the judge later quashed .

The Wall Street Journal and The New York Times reported that two prosecutors made a surprise visit to the Fed's headquarters construction site on Tuesday . In March, Chief Judge James Boasberg of the U.S. District Court for the District of Columbia quashed the pair of subpoenas, saying they were a pretext to pressure Powell into voting for lower interest rates or resigning . "There is abundant evidence that the subpoenas' dominant (if not sole) purpose is to harass and pressure Powell either to yield to the President or to resign and make way for a Fed Chair who will."

Senate Republicans Block Replacement

Trump's refusal to drop the investigation into Powell could complicate the confirmation process for Kevin Warsh, his nominee to lead the Fed . A key member of the Senate Banking Committee, Republican Thom Tillis of North Carolina, has said he will not vote to confirm Trump's nominee until the Justice Department's probe is resolved . "Kevin's a perfect candidate, and that's why it's so frustrating that somebody in DOJ in February decided that they were going to maybe garner favor from somebody in the White House by trying to invoke a criminal investigation against Jerome Powell," Tillis told NBC News. "Recognize there's not sufficient evidence to continue a criminal investigation, end it, and I will vote for Kevin Warsh."

Committee Chairman Tim Scott, R-S.C., said in a Fox Business interview that he believed Warsh would be confirmed; a hearing has been scheduled for April 21 . "Trump today said he intended to fire Powell if he does not leave when his term expires, which would open another legal battle that would only intensify Powell's resolve to remain at the Fed," said Tim Duy, chief economist at SGH Macro. "It increasingly appears that Trump's animosity toward Powell prevents an offramp that would allow a smooth transition to Warsh."

Legal Questions and Market Implications

Trump has repeatedly threatened to remove the Fed chairman, although it's not clear he has the authority to do so, absent a showing of serious wrongdoing. "As the law currently stands, it is not legal for President Trump to fire Powell at any point — as chair or as governor — unless the firing is 'for cause,'" he said. "The Federal Reserve Act of 1913 says the Federal Board of Governors can only be fired for serious misconduct."

If Mr. Trump follows through on his threats to fire Powell, investors would likely react negatively, said Columbia Business School professor Brett House, noting that financial markets value the Fed's ability to steer monetary policy independent of political pressure. "There's little question that markets will sell off if President Trump attempts to fire Jerome Powell," House said . This unprecedented confrontation between a president and the nation's central banker threatens to undermine the Federal Reserve's independence, a cornerstone of American monetary policy that has helped maintain economic stability for decades.