Donald Trump's attempt to force Federal Reserve Chair Jerome Powell out of office appears destined to backfire spectacularly, with the botched criminal prosecution potentially extending Powell's stay rather than shortening it.
According to reporting from Yahoo Finance's Jennifer Schonberger, the failed prosecution effort has been complicated further by the possibility that Powell's successor, Kevin Warsh—Trump's nominee for the position—could remain stuck in confirmation limbo indefinitely.
Powell made clear this past week that he intends to serve as the Fed's chair pro tempore if Warsh fails to win Senate confirmation before Powell's term expires in May. "That is what the law calls for," Powell told reporters Wednesday, pointing to historical precedent for such arrangements, including his own delayed confirmation to a second term under former President Joe Biden.
Powell also announced for the first time that he will not resign from the Federal Reserve's Board of Governors until the Justice Department investigation targeting him personally is fully resolved. "I have no intention of leaving the board until the investigation is well and truly over with transparency and finality," he said following the Fed's policy meeting.
The legal warfare intensified in January when D.C. U.S. Attorney Jeanine Pirro's Justice Department launched a criminal probe into Powell's congressional testimony regarding cost overruns on renovations to the Fed's Washington headquarters.
The strategy backfired dramatically when a federal judge this month invalidated two subpoenas the Justice Department had issued to the Fed, effectively dismantling the criminal probe and handing Powell a decisive legal victory. Pirro has vowed to appeal the decision.
The failed prosecution has had cascading consequences. Powell is now reconsidering his retirement timeline, and the investigation is simultaneously blocking Warsh's confirmation. A key Republican senator who otherwise supports Warsh has committed to blocking his confirmation until the Powell investigation concludes.
The irony is stark: Trump's aggressive tactics to remove Powell may accomplish the opposite. With Powell's term ending in less than two months and Warsh stalled in confirmation, Powell could remain as an effective shadow Fed chair for the foreseeable future.
As Krishna Guha, head of global policy and central banking for Evercore ISI, observed: "The irony of the subpoena misadventure is that it may finally succeed in creating a shadow Fed chair … one called Jay Powell."