From investigation to nomination deadlock, the Federal Reserve and the White House's 45-day ultimate battle.
2026-04-16 17:42:09
From the obstruction of federal prosecutors' surprise visit to the Federal Reserve headquarters construction site, to Trump's repeated threats to fire current Chairman Jerome Powell, and the deadlock in the nomination of a new chairman, the events not only highlight the power struggle between partisan interests, but also emphasize the unique status and power boundaries of the Federal Reserve as a "quasi-private entity".
Two sources familiar with the matter revealed that federal prosecutors made an unannounced raid this week on a construction site at the Federal Reserve headquarters, the site being the focus of an investigation into a $2.5 billion renovation project.
Two prosecutors and an investigator from the office of U.S. Attorney Jenny Piro arrived at the scene on Tuesday but were refused entry by the construction contractor and directed to connect with the Federal Reserve's legal team.
This surprise visit clearly demonstrates that even though the investigation has slowed the confirmation process for Trump's nominee for new chairman, the Trump administration's investigation into the Federal Reserve and Powell has not stopped.
The investigation focuses on two key issues: first, the project's cost overrun—currently estimated at $2.5 billion, exceeding the initial budget of $1.9 billion for 2022 by approximately $600 million; and second, the veracity of Powell's testimony to Congress last summer regarding the project.
In a Fox Business interview that aired Wednesday, Trump made it clear that he would continue to push forward with the investigation, stating bluntly, "There may be corruption in this, but it's more obviously incompetent."
A senior deputy in Piro's office has admitted: "Shouldn't we get to the bottom of this?" However, at a closed-door hearing by a federal judge last month, the investigation into the renovation project has so far found no evidence of any crime.
Robert Hull, an external lawyer for the Federal Reserve Board, sent a stern email to Piro's team in response to the surprise visit and the prosecution's request to "visit the construction site and check the progress."
Emails obtained by the Associated Press show that Federal District Judge James Bosberg has ruled that the prosecution's investigation into the renovation project was essentially a "pretext."
In the email, Hull clearly stated: "If you want to challenge this ruling, you should go through the judicial process; bypassing the court and forcibly intervening is by no means a compliant move."
This investigation, which appears to be targeting engineering issues, is actually closely linked to the change in the position of Federal Reserve Chairman.
Trump has already nominated Kevin Warsh to succeed Powell as the new chairman, and the Senate Banking Committee has announced that it will hold a confirmation hearing for Warsh's nomination on April 21.
But the nomination is now deadlocked, with the key sticking point being the crucial vote held by Republican Congressman Tom Tillis.
As a key member of the Senate Banking Committee, North Carolina Republican Senator Tillis has made it clear that he will reject Warsh's nomination unless the investigation into Powell is dropped.
Given the close party lines on the committee, Tillis's dissenting vote was enough to block Walsh's nomination.
Tillis on Wednesday vehemently criticized the investigation as "pure fabrication, absurdly timed, and based on unfounded evidence," and reiterated that all seven Republican members of the Banking Committee unanimously agreed that Powell had committed no criminal act when he testified last June.
He stated bluntly that neither the committee nor the Senate as a whole had enough votes to bypass the committee's procedures and force Warsh's nomination through; "there was simply no viable path."
More noteworthy is that the investigation has inadvertently slowed down Powell's departure.
Powell has made it clear that he will not resign until the investigation is concluded.
Furthermore, his term as a member of the Federal Reserve Board of Governors is independent of the chairman's term and will continue until January 2028. By convention, the chairman can choose to remain on the Board after his term ends. If he insists on remaining, Trump will not be able to add his own nominee to the seven-member Board of Governors.
Interestingly, on Tuesday evening, Tillis shared a Wall Street Journal report on social media with the caption "The District of Columbia Attorney's Office at the crime scene" and a satirical image from the sitcom "The Trio," clearly mocking the investigation.
Tillis is a key Republican senator on the Senate Banking Committee, holding the decisive vote for the Federal Reserve nominee; coupled with his retirement and lack of political baggage, his commitment to the independence of the Federal Reserve, and his legal and party support, he dared to stand up to Trump and directly block the process of "changing the leader".
However, according to Axios, the Trump administration's chief economist, Kevin Hassett, responded that the Justice Department's involvement was solely due to "the president's demand for a thorough investigation into cost overruns."
The president’s tough stance also disrupted the timeline of Senate Banking Committee Chairman Tim Scott, who had expected the investigation to “be completed in the coming weeks” so that Walsh could complete his nomination confirmation as soon as possible.
Beyond the investigation deadlock, Trump's threat to fire Powell has further escalated the conflict.
As news of the prosecutor's surprise visit broke, Trump once again issued a harsh statement: if Powell remains on the Federal Reserve Board of Governors after his term as chairman expires on May 15, he will fire him directly, "Then I will have to fire him, that's settled."
For months, Trump has been seeking to remove Powell from office, primarily because he has accused Powell of being too slow to push for interest rate cuts and a rapid boost to the U.S. economy.
Powell, however, pointed out that the investigation was essentially a political pretext for the Trump administration to undermine the Federal Reserve's independent interest rate policy.
Missouri Republican Senator Josh Hawley made it clear that Trump must have “just cause” for firing Powell, meaning there must have been clear misconduct, “and that threshold is actually very high.”
It is worth noting that Trump's personnel interference is not an isolated case.
Just as he threatened to fire Powell, the Supreme Court was simultaneously hearing his case to remove another Federal Reserve governor, Lisa Cook.
The lower court has ruled that Cook can continue to perform his duties during the legal proceedings, and the Supreme Court also showed a tendency to allow Cook to remain in office when it heard the arguments in January of this year. The final ruling may be announced at any time.
The core controversy in the Cook case lies in whether the mortgage fraud allegations she denied were the legal basis for firing her, or a pretext fabricated by Trump to strengthen his control over U.S. interest rate policy.
The Supreme Court previously ruled that the president can dismiss other government agency heads at his own discretion without proving wrongdoing, but emphasized that the Federal Reserve, as a "structurally unique quasi-private entity," needs to be treated with greater care regarding its independence—which laid the groundwork for the current controversy surrounding Powell's future.
This political turmoil surrounding the Federal Reserve also reflects the unique nature of the position of Federal Reserve Chairman.
The position itself does not directly bring huge wealth. The publicly disclosed salary in 2026 is about $250,000, which is only equivalent to an entry-level bonus on Wall Street. Therefore, the wealth level of the person holding the position depends entirely on whether they are "self-employed" or "academically trained," showing a huge gap from "extremely wealthy" to "middle class."
Powell himself is a typical example of the "wealthy enough to rival a nation" type. Before joining the Federal Reserve, he was a partner at the top private equity giant Carlyle Group, with a personal net worth estimated between $20 million and $75 million. He belongs to the elite who "brought Wall Street wealth into politics" and is one of the richest Federal Reserve chairmen since 1948.
The nominated successor, Kevin Walsh, is even more astonishingly wealthy, with assets potentially exceeding 100 million dollars thanks to his family background (his father-in-law is the head of Estée Lauder).
In stark contrast are the representatives of the "poor" academic faction, such as former chairmen Bernanke and Yellen, whose careers were mainly spent in Ivy League schools and government agencies. Bernanke's assets at the time of leaving office consisted mainly of retirement funds and real estate, amounting to about $2 million, which would only be considered upper-middle class among the American elite.
Legendary Chairman Volcker even gave up a high salary on Wall Street to insist on raising interest rates to combat inflation. During his tenure, he lived a simple life, and it was even joked that his wife had to sell her family property to make ends meet.
Despite their vastly different wealth backgrounds, all Federal Reserve chairs possess "political assets" capable of influencing the world, assets whose value far exceeds monetary. As "global central bank governors," a single statement from them can instantly wipe out trillions of dollars from global stock markets or plunge emerging market countries into financial crises. This ability to manage expectations is the highest form of political leverage.
During crises such as the financial tsunami, the president has enormous discretion to decide who to bail out and who not to bail out, making him the most crucial intermediary between Washington and Wall Street. More importantly, the president's four-year term often spans different presidential terms, and this "cross-generational" influence forces presidents to be mindful when formulating economic policies.
The Federal Reserve has long touted its independence. Its legal status, personnel system (governors serve 14-year terms), public-private partnership nature, and fiscal autonomy are all designed to protect monetary policy from short-term political interference.
However, the Trump administration's series of actions have undoubtedly posed a serious challenge to this independence.
With the Warsh nomination hearing approaching on April 21, Powell's term as chairman expiring on May 15, and the Supreme Court's related rulings imminent, the power struggle between the Federal Reserve and the White House will continue to unfold.
The outcome will not only determine the personnel direction of the Federal Reserve, but may also affect the stability and direction of global monetary policy, becoming a key variable affecting global financial markets.
Meanwhile, the market is already anticipating that Warsh's new administration will introduce the YCC (Young Currency Consortium) program coupled with increased government spending, which will lead to a weaker dollar. The current weakening of the dollar index is not only due to the easing of tensions but also to expectations of further easing by the Federal Reserve.
Unexpected Visit Blocked: A Standoff Triggered by a "Pretext" Investigation
Two sources familiar with the matter revealed that federal prosecutors made an unannounced raid this week on a construction site at the Federal Reserve headquarters, the site being the focus of an investigation into a $2.5 billion renovation project.
Two prosecutors and an investigator from the office of U.S. Attorney Jenny Piro arrived at the scene on Tuesday but were refused entry by the construction contractor and directed to connect with the Federal Reserve's legal team.
This surprise visit clearly demonstrates that even though the investigation has slowed the confirmation process for Trump's nominee for new chairman, the Trump administration's investigation into the Federal Reserve and Powell has not stopped.
The investigation focuses on two key issues: first, the project's cost overrun—currently estimated at $2.5 billion, exceeding the initial budget of $1.9 billion for 2022 by approximately $600 million; and second, the veracity of Powell's testimony to Congress last summer regarding the project.
In a Fox Business interview that aired Wednesday, Trump made it clear that he would continue to push forward with the investigation, stating bluntly, "There may be corruption in this, but it's more obviously incompetent."
A senior deputy in Piro's office has admitted: "Shouldn't we get to the bottom of this?" However, at a closed-door hearing by a federal judge last month, the investigation into the renovation project has so far found no evidence of any crime.
Robert Hull, an external lawyer for the Federal Reserve Board, sent a stern email to Piro's team in response to the surprise visit and the prosecution's request to "visit the construction site and check the progress."
Emails obtained by the Associated Press show that Federal District Judge James Bosberg has ruled that the prosecution's investigation into the renovation project was essentially a "pretext."
In the email, Hull clearly stated: "If you want to challenge this ruling, you should go through the judicial process; bypassing the court and forcibly intervening is by no means a compliant move."
Nomination deadlock: A crucial vote stalls Trump's "replacement of general" plan
This investigation, which appears to be targeting engineering issues, is actually closely linked to the change in the position of Federal Reserve Chairman.
Trump has already nominated Kevin Warsh to succeed Powell as the new chairman, and the Senate Banking Committee has announced that it will hold a confirmation hearing for Warsh's nomination on April 21.
But the nomination is now deadlocked, with the key sticking point being the crucial vote held by Republican Congressman Tom Tillis.
As a key member of the Senate Banking Committee, North Carolina Republican Senator Tillis has made it clear that he will reject Warsh's nomination unless the investigation into Powell is dropped.
Given the close party lines on the committee, Tillis's dissenting vote was enough to block Walsh's nomination.
Tillis on Wednesday vehemently criticized the investigation as "pure fabrication, absurdly timed, and based on unfounded evidence," and reiterated that all seven Republican members of the Banking Committee unanimously agreed that Powell had committed no criminal act when he testified last June.
He stated bluntly that neither the committee nor the Senate as a whole had enough votes to bypass the committee's procedures and force Warsh's nomination through; "there was simply no viable path."
More noteworthy is that the investigation has inadvertently slowed down Powell's departure.
Powell has made it clear that he will not resign until the investigation is concluded.
Furthermore, his term as a member of the Federal Reserve Board of Governors is independent of the chairman's term and will continue until January 2028. By convention, the chairman can choose to remain on the Board after his term ends. If he insists on remaining, Trump will not be able to add his own nominee to the seven-member Board of Governors.
Interestingly, on Tuesday evening, Tillis shared a Wall Street Journal report on social media with the caption "The District of Columbia Attorney's Office at the crime scene" and a satirical image from the sitcom "The Trio," clearly mocking the investigation.
Tillis is a key Republican senator on the Senate Banking Committee, holding the decisive vote for the Federal Reserve nominee; coupled with his retirement and lack of political baggage, his commitment to the independence of the Federal Reserve, and his legal and party support, he dared to stand up to Trump and directly block the process of "changing the leader".
However, according to Axios, the Trump administration's chief economist, Kevin Hassett, responded that the Justice Department's involvement was solely due to "the president's demand for a thorough investigation into cost overruns."
The president’s tough stance also disrupted the timeline of Senate Banking Committee Chairman Tim Scott, who had expected the investigation to “be completed in the coming weeks” so that Walsh could complete his nomination confirmation as soon as possible.
Threat of dismissal: Trump's "battle for independence" with the Federal Reserve
Beyond the investigation deadlock, Trump's threat to fire Powell has further escalated the conflict.
As news of the prosecutor's surprise visit broke, Trump once again issued a harsh statement: if Powell remains on the Federal Reserve Board of Governors after his term as chairman expires on May 15, he will fire him directly, "Then I will have to fire him, that's settled."
For months, Trump has been seeking to remove Powell from office, primarily because he has accused Powell of being too slow to push for interest rate cuts and a rapid boost to the U.S. economy.
Powell, however, pointed out that the investigation was essentially a political pretext for the Trump administration to undermine the Federal Reserve's independent interest rate policy.
Missouri Republican Senator Josh Hawley made it clear that Trump must have “just cause” for firing Powell, meaning there must have been clear misconduct, “and that threshold is actually very high.”
It is worth noting that Trump's personnel interference is not an isolated case.
Just as he threatened to fire Powell, the Supreme Court was simultaneously hearing his case to remove another Federal Reserve governor, Lisa Cook.
The lower court has ruled that Cook can continue to perform his duties during the legal proceedings, and the Supreme Court also showed a tendency to allow Cook to remain in office when it heard the arguments in January of this year. The final ruling may be announced at any time.
The core controversy in the Cook case lies in whether the mortgage fraud allegations she denied were the legal basis for firing her, or a pretext fabricated by Trump to strengthen his control over U.S. interest rate policy.
The Supreme Court previously ruled that the president can dismiss other government agency heads at his own discretion without proving wrongdoing, but emphasized that the Federal Reserve, as a "structurally unique quasi-private entity," needs to be treated with greater care regarding its independence—which laid the groundwork for the current controversy surrounding Powell's future.
Behind the President: Vast Wealth Disparity and Globally Influential "Political Assets"
This political turmoil surrounding the Federal Reserve also reflects the unique nature of the position of Federal Reserve Chairman.
The position itself does not directly bring huge wealth. The publicly disclosed salary in 2026 is about $250,000, which is only equivalent to an entry-level bonus on Wall Street. Therefore, the wealth level of the person holding the position depends entirely on whether they are "self-employed" or "academically trained," showing a huge gap from "extremely wealthy" to "middle class."
Powell himself is a typical example of the "wealthy enough to rival a nation" type. Before joining the Federal Reserve, he was a partner at the top private equity giant Carlyle Group, with a personal net worth estimated between $20 million and $75 million. He belongs to the elite who "brought Wall Street wealth into politics" and is one of the richest Federal Reserve chairmen since 1948.
The nominated successor, Kevin Walsh, is even more astonishingly wealthy, with assets potentially exceeding 100 million dollars thanks to his family background (his father-in-law is the head of Estée Lauder).
In stark contrast are the representatives of the "poor" academic faction, such as former chairmen Bernanke and Yellen, whose careers were mainly spent in Ivy League schools and government agencies. Bernanke's assets at the time of leaving office consisted mainly of retirement funds and real estate, amounting to about $2 million, which would only be considered upper-middle class among the American elite.
Legendary Chairman Volcker even gave up a high salary on Wall Street to insist on raising interest rates to combat inflation. During his tenure, he lived a simple life, and it was even joked that his wife had to sell her family property to make ends meet.
Despite their vastly different wealth backgrounds, all Federal Reserve chairs possess "political assets" capable of influencing the world, assets whose value far exceeds monetary. As "global central bank governors," a single statement from them can instantly wipe out trillions of dollars from global stock markets or plunge emerging market countries into financial crises. This ability to manage expectations is the highest form of political leverage.
During crises such as the financial tsunami, the president has enormous discretion to decide who to bail out and who not to bail out, making him the most crucial intermediary between Washington and Wall Street. More importantly, the president's four-year term often spans different presidential terms, and this "cross-generational" influence forces presidents to be mindful when formulating economic policies.
Conclusion: The ongoing power struggle adds uncertainty to global monetary policy.
The Federal Reserve has long touted its independence. Its legal status, personnel system (governors serve 14-year terms), public-private partnership nature, and fiscal autonomy are all designed to protect monetary policy from short-term political interference.
However, the Trump administration's series of actions have undoubtedly posed a serious challenge to this independence.
With the Warsh nomination hearing approaching on April 21, Powell's term as chairman expiring on May 15, and the Supreme Court's related rulings imminent, the power struggle between the Federal Reserve and the White House will continue to unfold.
The outcome will not only determine the personnel direction of the Federal Reserve, but may also affect the stability and direction of global monetary policy, becoming a key variable affecting global financial markets.
Meanwhile, the market is already anticipating that Warsh's new administration will introduce the YCC (Young Currency Consortium) program coupled with increased government spending, which will lead to a weaker dollar. The current weakening of the dollar index is not only due to the easing of tensions but also to expectations of further easing by the Federal Reserve.
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