Fed Independence at Risk? Lummis and Hassett on Powell Probe

White House economic adviser Kevin Hassett defended the DOJ scrutiny linked to Fed Chair Jerome Powell and framed it as a basic review of spending. He said extreme building costs justify federal investigation, even as critics warn it could pressure the central bank.

Hassett Dismisses Fed Independence Fears Over DOJ Review

CBC News reported that Hassett claimed that the problem was to be considered in the context of tension surrounding the U.S. interest rates. He admitted that the administration has been putting pressure on the rate policy. Nevertheless, he referred to the case as supervision, rather than intervention.

Reporter questioned on whether the investigation would weaken Fed independence and destabilize markets. He dismissed that worry and indicated the magnitude of the cost issue. He remarked that when a project related to the government amounts to $10-billion or even $20-billion, it would be right to the federal authorities to take a look at what occurred.

He claimed that the Justice Department is seemingly attempting to get to the bottom of why the Federal Reserve building project has become so costly. Hassett has referred to it as vastly more expensive than other constructions in Washington. He also said that in the case that he is in the position of Powell, he would have the investigators go over the spending and explain how the money was used.

Lummis Presses Powell as Warren Calls Probe a Power Grab

Sen. Cynthia Lummis took the accountability framing. Punchbowl News reported that the Wyoming Republican stated that Powell was not worthy of any sympathy as the investigation continues. She claimed that taxpayer has a right to know how the Fed spent money.

Lummis stated that the dispute is leaving two outcomes. She claimed that Powell had not been ready in a testimony or that he had knowingly lied to the legislators regarding lavish spending. Lummis made an addition that she will not say any more until the DOJ issues its findings.

Democrats pushed back hard. Elizabeth Warren, a Democrat of the Senate Banking Committee, stated that the situation is political misuse of federal power. She alleged that President Donald Trump had misused DOJ power to make the Fed act in his favor.

Warren cautioned that the strategy would put a strain on the central bank independence. She claimed that it would render Fed policy to respond to political influence instead of economic data. Warren also hinted that this kind of pressure might undermine market confidence.