"‘Powell mouthpiece’ explains: ‘Staying’ is to protect the Federal Reserve, Trump’s lawsuit is ‘counterproductive’"
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After his term as Federal Reserve Chair expired, Jerome Powell chose to remain on the Board, a rare decision driven by systematic pressure from the White House on the Fed’s independence—a pressure campaign that ultimately had the opposite effect from what was intended.
On May 3, Nick Timiraos, a Wall Street Journal reporter long known as the “new Fedwire,” wrote that Powell had been expecting to retire, but said in an interview that a series of events over the past three months “left him no choice.” He characterized the Trump administration’s legal offensive against the Fed as “unprecedented in the institution’s 113-year history,” warning that these attacks were “damaging the institution.”
After his term ends on May 15, Powell will become the first Fed chair since Marriner Eccles in 1948 to stay on the Board after the conclusion of his chairmanship.
According to the article, sources close to Powell say it was the criminal investigation by the Justice Department that solidified his determination to stay. This move, they describe as “a fundamental misjudgment of Powell”—not only did it fail to drive him out, it reinforced his sense of responsibility to the institution.
The article notes that the Trump administration criticized the decision. Treasury Secretary Scott Bessent called it “against all norms of the Federal Reserve,” while former White House economic advisor Larry Kudlow said bluntly on Fox Business, “Powell is not the martyr he thinks he is.”
Criminal Investigation Becomes the Flashpoint for Staying
The immediate trigger for Powell’s decision to stay was the Department of Justice opening a criminal investigation in January into his oversight of renovation work at the Federal Reserve building.
According to the article, sources revealed that Powell launched a legal counterattack behind the scenes, and a federal judge subsequently ruled the related subpoenas improper. Bipartisan members of Congress also said the case did not warrant criminal investigation.
The episode stalled the confirmation process in the Senate for Trump’s nominee for Fed chair, former Governor Kevin Warsh, until the U.S. Attorney’s Office announced on April 24 that it had paused the investigation; only then did Warsh’s confirmation move forward, passing along party lines in the Senate Banking Committee last week.
However, in his final press conference, Powell made it clear that the way the investigation ended did not meet the standards he had previously set publicly—he demanded the investigation end in a “transparent and final” manner. The Justice Department only provided private assurances that it would bring criminal charges only if the Fed’s Inspector General found wrongdoing, hinting that the investigation could be reopened at any time, but did not issue a public declaration of innocence.
People familiar with Powell’s thinking pointed out that the intentions revealed in the investigation made remaining seriously worth consideration. “Without this investigation, once Trump nominated Warsh, Powell would not have seriously considered staying,” these people said.
Pressure Does Not Stop Here: Fed Governors Also in Crosshairs
The criminal investigation was not the only source of pressure. There were also White House allies circulating discussions about firing Federal Reserve Bank presidents, which further deepened public concern over the Fed’s independence.
Since 1935, reserve bank presidents have existed as a structural check on the White House’s influence over monetary policy. According to those familiar with the matter, the strategy might change, but the goal will not:
To take control over the Fed’s decentralized interest-rate-setting committee outside the statutory process—beyond the regular two-year rotation of Board seats.
Earlier, the White House sought to fire Fed Governor Lisa Cook in August last year. Cook mounted a legal challenge, which is currently pending before the Supreme Court.
Analysis indicates that this series of moves constitutes what Powell has described as a systematic threat to the institutional independence of the Fed.
The Price of Staying: Institutional Protector or Political Variable?
Powell’s choice to remain is not without cost. Both he and outside observers admit this move brings fresh risks to the institution he is trying to protect.
Former Philadelphia Fed President Patrick Harker wrote, “He’s been doing this from the start—he absorbs the pressure, or else the whole institution would have to.” But he also pointed out, “Powell has every right to retire—he’s earned it—but he chose not to.”
Former Cleveland Fed President Loretta Mester said that every vote Powell takes in the future will be interpreted as a political signal. “He doesn’t want to be seen as standing in the new chair’s way,” she said. “If he ever has to cast a dissenting vote, it will lead to more scrutiny: ‘The Fed is getting politicized.’”
Powell himself is aware of this dilemma. He said he does not intend to become a “high-profile dissenter” and will keep a low profile. At the same time, he hopes to see not only a legal resolution of the matter but also for the Fed’s relationship with the administration to return to normal. “I hope we can move out of this period and return to a state where the law and norms are respected, and let the Fed do what it’s supposed to do,” he said.
How Long Will Powell Stay?
Powell’s term as a Fed Governor runs until early 2028, but he has not indicated how long he will actually remain.
Jon Faust, who served as Powell’s senior advisor from 2018 to 2024, said that since Powell is seeking credible assurances from a government that has “repeatedly proven unable to restrain its retaliatory impulses,” “I expect Powell’s tenure could last quite a while.”
Meanwhile, Warsh has put forth an ambitious reform agenda for the Fed, covering how it operates, its relationship to the Treasury, and a complete remaking of how it communicates with the public. Even if Powell does not give speeches or interviews, his mere presence in the meeting room will inject an unprecedented variable into these debates.
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