US Attorney for the District of Columbia Jeanine Ferris Pirro speaks during a press conference at the Department of Justice, Washington, DC, US, Aug. 12, 2025.
Annabelle Gordon | Reuters
President Donald Trump has repeatedly attacked the independence of the Federal Reserve. Friday’s dropping of the Justice Department’s investigation into Federal Reserve Chairman Jerome Powell does not fully resolve the threat, although it will pave the way for the confirmation of Trump’s nominee for chairman, Kevin Warsh.
“I think it would be foolish to conclude from this that the Fed is out of the woods,” said Lev Menand, a professor at Columbia Law School.
Warsh has long promised to keep the Fed independent, including Tuesday’s nomination hearing. But it remains to be seen how he can stand up to the president who said that lowering interest rates is the ultimate test for his nominee. Trump is not shy about telling the regular parts of the federal government what to do. The Fed is one of the few figures left outside his control.
US Attorney Jeanine Pirro said on Friday that she would drop her investigation into the cost hikes in the Fed’s stimulus plans and Powell’s testimony about them. Sen. Thom Tillis, RN.C., refused to allow Warsh’s nomination to proceed to a full Senate vote pending an investigation, because he sees it as a threat to the Fed’s ability to set interest rates without political considerations.
Tillis has not said if he will give up his power now that Pirro has stepped down. Pirro said he wants to see the results of the investigation by the Fed’s inspector general. “I will not hesitate to restart the criminal investigation if the truth is right,” he said in a statement.
The prospect that Pirro might reopen the investigation could give the Fed pause, said Scott Alvarez, the Fed’s former general counsel. Pirro’s office told the judge in March that it had no direct evidence of wrongdoing that could support the release of the pigeons. The Feds will probably want to know what facts would cause Pirro to respond to the investigation.
“I would imagine that the lack of clarity in Pirro’s statement may cause Jay to worry about being harassed by the DOJ after he leaves the Fed,” said Alvarez. The Fed is probably trying to figure that out, he said.
The Fed declined to comment. Warsh did not immediately respond to a request for comment.
“The White House remains as confident as ever that the Senate will quickly confirm Kevin Warsh as the next Chairman of the Federal Reserve to finally restore power and confidence in the Fed’s decision-making,” White House spokesman Kush Desai said in a statement.
Trump appointed Powell in 2017 to the seat he now holds, but the president quickly resented him because he did not like the way Powell handled interest. During his first term in the White House, Trump considered firing Powell but did not act.
In his second administration, Trump has gone further. He criticized Powell for not cutting interest rates more, which Trump said made it more expensive to finance the US debt.
The Fed is charged by law with setting rates to try to allow full employment and inflation. Countries where central banks have lost their independence, such as Turkey, have seen inflation rise.
Pirro said he acted independently in deciding to investigate Powell, but Trump wholeheartedly supported the investigation. He said he believed there was “criminality” involved in the Fed’s adjustment project.
Trump in August said he was removing Governor Lisa Cook from the Fed’s board, saying she was involved in mortgage fraud. He fought the allegations and the courts allowed him to remain in his seat while the case was heard in the Supreme Court. Powell attended court arguments in January regarding Cook’s case. A decision could come as soon as Wednesday.
Even if the court allows Cook to stay in office, the president may still want to remove Powell. Trump has suggested recently that he is considering doing so, even if Warsh is confirmed as chairman. Powell can remain in his separate role as governor on the Fed’s seven-member board until January 2028.
“I’m going to have to fire him, OK? If he doesn’t leave on time,” Trump said in an April 15 interview on Fox Business.
“This has been a concerted effort to provide the administration with more control over the Fed’s policymaking,” Menand said. “It’s been going on for over a year, and the administration has used different tactics over and over again.”
Trump is unlikely to relinquish his interest in the Fed under the new chair. Trump would be disappointed if Warsh doesn’t immediately lower the tariffs, the president told CNBC the morning of Warsh’s Senate confirmation.
Warsh said at the hearing that it will be his — and the Fed’s — decision on where to set rates, regardless of what Trump says. “I don’t believe that the independence of monetary policy is in jeopardy if elected officials put their views on rates,” said Warsh. “The independence of the Fed depends on the Fed.”
Trump can still make him prove it.
