Trump’s D.O.J. Went After the Fed. It Backfired. - The Daily Recap

Podcast: The Daily

Published: 2026-01-15

Duration: 28 minutes

Guests: Colby Smith, Glenn Thrush

Summary

The Trump administration initiated a criminal investigation into Federal Reserve Chairman Jerome Powell, allegedly to pressure him regarding interest rates. This move backfired, strengthening Powell's position and sparking widespread political backlash.

What Happened

The episode explores how a simmering conflict between President Trump and Federal Reserve Chairman Jerome Powell escalated to a criminal investigation. Trump had been pressuring Powell to lower interest rates, but Powell resisted, maintaining his stance for economic stability. Over the summer, Trump found a new angle by focusing on cost overruns in the Federal Reserve's renovation project, which became a pretext for the investigation.

Despite the renovation project being significantly over budget, no criminal activity was evident. The Trump administration, however, saw this as an opportunity to leverage against Powell. Within Trump's circle, Bill Pulte, an advisor, pushed for action against Powell, leading to the involvement of Janine Pirro, the U.S. Attorney for Washington, D.C., who initiated the investigation.

The investigation was initially subtle, marked by polite requests for information from the Fed. However, the Fed did not respond to these requests, which were perceived as casual rather than urgent, leading to an escalation by the Justice Department.

Powell responded to the subpoenas with a public video statement, unprecedentedly addressing the President's legal threats and emphasizing the importance of the Fed's independence. This move rallied significant political support for Powell, including from Republicans who typically aligned with Trump.

The backlash was swift, with Republicans and Trump allies criticizing the investigation as destabilizing and unnecessary. Senator Tom Tillis openly opposed any replacement for Powell if the investigation continued, signaling a rare break from Trump's agenda.

The investigation threatened to disrupt the administration's plans to nominate Powell's replacement, with Treasury Secretary Scott Besson expressing concerns. The episode concludes with the notion that Trump's attempt to assert control over the Fed might have inadvertently strengthened Powell's position, highlighting the limits of political pressure on financial institutions.

Key Insights