Powell has been sued, and key Republican lawmakers have turned against him: I will vote against it, and Trump shouldn’t even think about nominating a new Fed chair!

After Federal Reserve Chairman Powell accused the Justice Department of launching a grand jury investigation to pressure the central bank, Trump immediately faced bipartisan backlash, and his plan to nominate a new Fed chair encountered major obstacles.

According to a Bloomberg report on Monday, Republican Senator Thom Tillis, a key member of the Banking Committee, issued a statement on Sunday explicitly opposing any Trump nominee for the Fed, including the soon-to-be-vacant Chair position, until the Justice Department investigation is thoroughly resolved. Tillis also serves on the Judiciary Committee and has oversight authority over the Justice Department.

In written and video statements issued Sunday night, Powell stated that the investigation was nominally related to Fed headquarters renovations mentioned in his June Congressional testimony, but "should be understood in the broader context of government threats and ongoing pressure." He warned that this concerns whether the Fed can continue to set interest rate policy based on evidence and economic conditions, or if it will succumb to political pressure and intimidation.

Democratic lawmakers quickly followed with condemnation. Senior Democratic Banking Committee member Elizabeth Warren accused Trump of "abusing the law like a dictator," and called for the Senate to refuse consideration of any Trump nominee for the Fed. Senate Democratic leader Chuck Schumer warned that undermining the Fed’s independence would threaten the economy.

Growing Republican Division

Tillis’s opposition presents a substantial obstacle to Trump’s plan to reorganize the Fed. Currently, the Senate Banking Committee’s partisan split is 13 to 11; Tillis’s "no" vote would likely deadlock any Fed nominee at the committee level. According to current Senate rules, advancing a contested nomination from committee requires 60 votes.

In his statement, Tillis said: “If anyone previously doubted whether advisers in the Trump administration were actively seeking to end Fed independence, there should be no doubt now. What’s now being questioned is the independence and credibility of the Justice Department.” As a Republican senator not seeking re-election, his tough stance signals he is not restrained by electoral pressure.

According to NBC, Trump denied in an interview any knowledge of a Justice Department investigation into the central bank. But Powell pointedly noted that the move should be understood as connected to government threats and continued pressure, raising the issue of whether the Fed will be able to set interest rates based on economic conditions, or be swayed by political pressure and intimidation.

Trump Escalates Pressure on the Fed

For months, Trump has made it clear he wants the Fed to rapidly and substantially cut rates. Multiple government departments have attacked current Fed governors, including Biden appointee Lisa Cook and current Chair Powell.

This Justice Department investigation nominally targets issues Powell testified about in June regarding the Fed headquarters renovation project. However, in Powell’s statement, he explicitly characterized the investigation as a political pressure tactic, not a normal legal process.

Florida Republican Representative Anna Paulina Luna had previously called for an investigation into Powell’s statements to Congress about the renovation project. On social media platform X, she welcomed the investigation, writing: "Unelected bureaucrats should not be immune."

White House Facing Multiple Congressional Setbacks

Tillis’s quick response comes as Trump has recently faced a series of Republican defections in Congress. Last week, the House voted to extend Biden-era health care subsidies, and the Senate advanced legislation to end military action in Venezuela.

According to a Global Times report citing NBC, hours after the Senate voted to condemn current and future White House actions in Venezuela, Trump "angrily" called the five Republican senators who supported the measure: Rand Paul, Josh Hawley, Lisa Murkowski, Susan Collins, and Todd Young. Sources said Trump warned these senators will face primary challenges, threatening to "bring them down."

On the 8th, the Senate voted 52 to 47 in favor of an initial procedural vote, advancing the bipartisan resolution to restrict Trump from taking military action against Venezuela without Congressional authorization. The Senate is expected to hold a formal vote this week.

Risk Notice and DisclaimerThe market involves risks, and investment should be made cautiously. This article does not constitute personal investment advice, nor does it take into account individual users’ specific investment objectives, financial situations, or needs. Users should consider whether any opinions, views, or conclusions in this article fit their particular circumstances. Invest accordingly at your own risk.