Powell Goes Public About Trump’s Unprecedented Attack on the Fed
A lot has happened. Here are some of the things. This is the TPM Morning Memo.
Programming note: Join me for the first Morning Memo Live event on January 29 in Washington, DC Find details and tickets here.
Banana Republic Tactics
In what looked like a hostage video, Federal Reserve Chairman Jerome Powell announced Sunday evening that he was the target of a retaliatory criminal investigation by the Trump administration that culminated in subpoenas Friday to the Federal Reserve itself.
What makes Powell’s announcement reminiscent of a hostage video is not the quality of the recording or Powell’s failure to oppose Trump’s repeated attempts to bring the Fed under his thumb, but the fact that Powell was put in this situation: a central banker confronted with banana republic tactics and forced to make a direct appeal to the public (read: financial markets).
Powell, originally named Fed chairman by Trump, has not hesitated to say that the criminal investigation into his congressional testimony about renovations to the Fed’s Washington headquarters is a pretext, a thinly veiled attempt to force the independent Federal Reserve to lower short-term interest rates, as Trump wants, and subordinate monetary policy to the long-term political demands of the sitting president.
“The threat of criminal prosecution is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the president’s preferences,” Powell said.
By making it public, Powell alerted financial markets and central bankers around the world to Trump’s most extreme move to undermine the independence of the Fed.
The criminal investigation and resulting subpoenas were just the latest step in Trump’s year-long effort to bring the Fed to heel. He once attempted to fire Federal Reserve Governor Lisa Cook based on false claims of mortgage fraud. That case — which tests whether the Fed will remain truly independent — is pending before the Supreme Court, which will hear oral arguments next week. More broadly, the Federal Reserve is threatened by Trump’s wide-ranging attacks on independent agencies, although the Roberts Court has already indicated that this may be a bridge too far, even for justices enthusiastic about expanding their ahistorical theory of the unitary executive.
Although Powell is the immediate target of this retaliatory criminal investigation, he may not be the ultimate target. Powell’s term as head of the Federal Reserve ends in May, and Trump says he has already chosen a successor for Powell, although he has not yet revealed who it would be. As the Wall Street Journal’s Greg Ip notes, the subpoenas are a message to the new chair and other Fed governors (Powell’s term as governor doesn’t end until 2028) that the president has them on a tight leash.
Among the details:
- Federal Housing Finance Agency Director Bill Pulte was a “driving force” behind the subpoena, Bloomberg reports. For his part, Pulte said, “I don’t know anything about it and I would turn you over (sic) to the DOJ.” »
- “I don’t know anything about it,” Trump told NBC News, using oft-repeated phrasing that has sometimes proven demonstrably false in the past.
- DCUS attorney Jeanine Pirro “approved” the investigation in November, the New York Times reports, and prosecutors in her office made “multiple” requests for documents from Powell’s staff regarding the renovation project.
- “I will oppose the confirmation of any nominee to the Fed – including the next Fed Chair vacancy – until this legal issue is fully resolved,” Sen. Thom Tillis said on X.
Today’s headline
If your headline about the fake Federal Reserve “investigation” is indistinguishable from what you would have used for a good old political scandal, then you are 100% wrong:
- WSJ: US prosecutors are investigating Fed Chairman Jerome Powell.
- WaPo: Justice Department opens criminal investigation against Fed Chairman
- New York Times: Federal prosecutors open investigation into Fed Chairman Powell
- CNN: Federal prosecutors open criminal investigation into Fed and Jerome Powell
Chart of the day
Quote of the day
“The total capture of the DOJ, seemingly with very little pushback or resistance, is one of the most striking examples of the capitulation of American elites to authoritarianism. It’s been less than a year, and the federal prosecutions or investigations are already completely discredited.”Filipe Campante, professor at Johns Hopkins University
GM Oversight
- Christopher G. Raia, the head of the FBI’s New York office, is expected to become deputy director of the FBI, a return to a career agent in that role following the departure of Dan Bongino.
- Former special counsel Jack Smith launched a new law firm with Tim Heaphy, the lead investigator on the Jan. 6 House select committee; Thomas Windom, a former member of Smith’s team investigating the January 6 case; and David Harbach, who worked on the Mar-a-Lago classified documents case.
Trump still lives the big lie
President Trump told The New York Times last week that he regretted not seeing the National Guard seize voting machines in swing states after the 2020 election.
Watch fucking rats mid-session
- In a ruling Friday, U.S. District Judge John Chun in Seattle blocked the Trump administration from threatening to withhold federal election funding for states that refuse to change their voter registration forms or voting systems to comply with a Trump executive order.
- The WaPo provides an overview of the many unprecedented ways Trump is attempting to manipulate the outcome of the 2026 midterm elections:
The administration gutted the national cybersecurity agency’s role in protecting elections; stocked the Department of Justice, the Department of Homeland Security, and the FBI from top to bottom with officials who denied the legitimacy of the 2020 election; giving an audience at the White House to people who, like the president, promote the lie that he won the 2020 election; sued over state and local election policies that Trump opposes; and called for a new census that would exclude non-citizens. These wide-ranging efforts aim to expand on some of the strategies used by him and his advisors and allies to try to reverse the 2020 results that culminated with the attack on the U.S. Capitol on January 6, 2021.
2026 Ephemeral
Former Rep. Mary Peltola (D-AK) will challenge incumbent Sen. Dan Sullivan (R-AK), a big candidate recruitment victory for Democrats trying to improve their long-term chances of winning the Senate this year. Peltola lost his 2024 re-election bid to Republican Nick Begich III.
Racism remains Trump’s Rosetta Stone
In an interview with The New York Times, Trump said the civil rights movement resulted in white people being “treated very badly.”
Sign of the times
A suspect has been arrested in an arson attack at a synagogue in Jackson, Mississippi.
Monitoring mass deportations
- After being left out of the federal investigation, Minnesota launched its own probe into last week’s fatal ICE shooting.
- On Thursday, the day after the Minneapolis shootings, DHS Secretary Kristi Noem reinstated limits preventing lawmakers from making unannounced visits to immigration centers. On Saturday, officials used the new guidelines to block Minnesota Democratic Reps. Angie Craig, Ilhan Omar and Kelly Morrison from accessing a detention center in Minneapolis.
- Since July, ICE has fired on vehicles 13 times, leaving at least eight people shot and two confirmed dead, the WSJ reports.
Today in demographic trends
The U.S. population is expected to peak at 364 million people in 2056 and then begin to decline, according to a new estimate from the Congressional Budget Office that reduces the population peak from previous estimates and accelerates the date when the U.S. population will begin to decline.
Any hot tips? A juicy scuttlebutt? Any interesting ideas? Let me know. For sensitive information, use encrypted methods here.
