White House insiders were reportedly reeling Monday as President Donald Trump's Department of Justice launched its investigation of Federal Reserve Chair Jerome Powell, prompting anxiety over financial market disruptions.
The Trump administration was apparently in "damage-control mode" after the news heightened over the DOJ's criminal probe announcement that alleges Powell lied about the scope of renovations at the Fed headquarters, Politico reported.
"Privately, some White House officials see the episode as radioactive, with aides and allies eager to distance themselves from a probe they believe could do more damage to the White House than to Powell," according to Politico. "One of the five people familiar said some inside and close to the White House are 'freaked out' that a further threat to the Fed chief’s job security could spook the bond market."
The White House was reportedly working to distance itself from the investigation as Press Secretary Karoline Leavitt told reporters Monday that the Trump administration was not aware of the investigation and that president did not prompt the DOJ to initiate the subpoenas.
"And given the Fed’s role in keeping a lid on inflation, the decision to target Powell in a criminal probe risks eroding Wall Street’s confidence in Trump’s economic agenda and the central bank’s credibility at a time when the president faces serious political challenges over his handling of the economy before the midterm elections," Politico reported.
Powell has pushed back on President Donald Trump's pressure over lowering interest rates. He issued a defiant response in a video statement on Sunday, responding to the president's most recent revenge attack. Trump's other retribution campaigns have targeted Federal Reserve Governor Lisa Cook, FBI Director James Comey and New York Attorney General Letitia James.
“I have deep respect for the rule of law and for accountability in our democracy. No one—certainly not the chair of the Federal Reserve—is above the law,” Powell said. “But this unprecedented action should be seen in the broader context of the administration’s threats and ongoing pressure.”