Senator Warren presses Trump over DOJ probe of Fed Chair Powell

By Ann Saphir and Andrea Shalal

Feb 6 (Reuters) – U.S. Senator Elizabeth Warren on Friday challenged President Donald Trump’s denial of involvement in a Justice Department investigation of Federal Reserve Chair Jerome Powell that has heightened concerns about the Fed’s independence and complicated the president’s plan to install a rate-cut friendly Fed chair.

Warren, in a letter viewed by Reuters, asked Trump, a Republican, to explain his involvement in the Powell probe and a separate one of Fed Governor Lisa Cook after Treasury Secretary Scott Bessent on Thursday said any future probes and lawsuits would be up to the Republican president.

Warren is the top Democrat on the Senate Banking committee, which must confirm Trump’s pick to replace Powell. That process is already being held up by a key Republican on the panel. The committee’s chair, Republican Senator Tim Scott, has said he does not believe Powell broke the law.

“Was the decision to launch a criminal investigation of Chair Powell ‘up to’ you, despite your claims to the contrary?” Warren wrote to Trump in a letter dated Friday.

Trump sparked a minor furor over the weekend when he remarked he would sue his Fed chair nominee, Kevin Warsh, if the former Fed governor didn’t lower rates should he be confirmed to replace Fed Chair Jerome Powell later this year.

The president later told reporters aboard Air Force One that it was a joke.

Treasury Secretary Scott Bessent, in a caustic exchange with Warren on Thursday, declined to commit that the Trump administration would not sue Warsh if he did not cut rates, telling Warren: “That is up to the president.”

Speaking to CNBC on Friday, Bessent stressed that Trump’s comment about suing Warsh was a joke, something he had declined to do on Thursday, and said the president “has great respect for the Fed, for the Fed’s independence.” 

Powell disclosed the unprecedented DOJ probe in January, saying that while the subpoenas were about his statements to the Senate about the Fed’s building renovations, they “should be seen in the broader context of the administration’s threats and ongoing pressure” on the Fed to cut rates.

The news prompted Republican lawmaker Thom Tillis, a key member of the Senate Banking committee, to promise a hold on any Fed nominee for the duration of the DOJ investigation, which he said amounted to political interference.

Powell has not said if he will stay on as governor after his term as Fed chair ends in May. Doing so would run counter to tradition and would force Trump to remove newly appointed Fed governor Stephen Miran in order to make way for Warsh to join the central bank’s seven-member Board. Miran, who had headed the White House Council of Economic Advisers, joined the Fed in September and is its biggest proponent of the rate cuts Trump has wanted.  

Trump had repeatedly threatened to try to fire Powell for not cutting rates, and in December said he was thinking of filing a lawsuit against him. The same day, Warren noted in her letter, the Department of Justice contacted Powell asking for details about his statements to Congress. Two weeks later it had launched its criminal investigation. 

A source familiar with the White House’s thinking said outside lawyers advised Trump even before taking office in 2025 that it would be difficult to remove Powell for policy differences, prompting the White House to look for other options – including alleged cost overruns on the renovation project.

Warren’s letter also asked Trump if the DOJ investigation into Fed Governor Lisa Cook had been “up to” the president.

Trump tried to fire Cook last year, around the time the DOJ opened a probe into Cook’s alleged misstatements on her mortgage applications. Cook denies wrongdoing and has challenged her firing in court in a case now before the Supreme Court and widely seen as a referendum on the limits, or lack thereof, to presidential influence over the U.S. central bank.

The White House declined to comment on Warren’s letter, referring to Trump’s public statements on the issue. Trump has said he did not know anything about the probe and would not think of putting pressure on Powell that way. 

(Reporting by Ann Saphir, Andrea Shalal and Michael S. Derby; Editing by Chizu Nomiyama )