Practical Responses to the Trump DOJ’s Extortionate Investigation of Fed Chairman Jerome Powell

I agree with Jeff Blehar and Noah Rothman that the Trump Justice Department’s opening of a criminal investigation of Jerome Powell, chairman of the Federal Reserve, is a disgrace. It is, moreover, laughable for the president and his minions to suggest that Trump didn’t know anything about it.

The president spent his four years out of office claiming that it was absurd to believe that President Biden was not the prime mover of the Biden Justice Department’s criminal investigations of Trump and his allies. It didn’t matter how many times Biden’s attorney general, Merrick Garland, denied the allegation, or that the administration appointed a special counsel (Jack Smith) in an (unpersuasive) effort to distance itself from the decisions to indict Trump.

The politicized Powell probe is not a one-off. The Justice Department has a now extensive pattern of pursuing Trump’s political enemies and officials he seeks to scapegoat. The suggestion that these lawfare gambits are the idea of Pam Bondi or Jeanine Pirro, with no direction from Trump, would insult the intelligence even if we did not have Trump’s diatribe against Bondi for foot-dragging on charges against James Comey, Letitia James, and Adam Schiff (which was reportedly meant to be a private communication to the AG that the president mistakenly posted publicly).

Let’s face it: This is the way the president plans to conduct himself as long as Congress is controlled by quaking Republicans, such that he needn’t worry about impeachment or congressional investigations. I would, however, suggest some practical responses.

First, the Senate should stop further consideration of Trump nominees. Republicans should be doing this anyway to vindicate Congress’s constitutional prerogatives, which (as I’ve detailed again in a piece today) Trump has been trying to undermine, since his 2024 election, by circumventing the nominations process (i.e., the Constitution’s requirement of Senate approval of important executive officials and judges). But even if Republicans are too spineless to confront what’s happening, Senate rules give the minority privileges to block or stall nominations. The Democrats are going to keep doing this; the mere fact that they’re Democrats, and that they support the shenanigans of Democratic presidents doesn’t make them wrong about this. If the Justice Department is going to politicize its prosecutorial authority, Republicans should try to remember what they said and did when the Obama and Biden administrations practiced lawfare. It shouldn’t be that hard to say: It’s wrong, no matter which side does it.

Second, Congress should amend the obstruction and false-statement statutes in the penal law to require a referral from Congress before the Justice Department may investigate or charge someone for providing false statements to, or otherwise obstructing, a congressional investigation. The Constitution gives Congress its own array of powers to address obstruction of its proceedings; until the last two administrations, the executive branch rarely got involved. The executive branch should not put its enforcement muscle behind Congress’s investigations unless Congress asks it to do so (which, it should be pointed out, does not oblige the Justice Department to bring charges).

I imagine that if a vote were taken, Congress would overwhelmingly reject a Justice Department inquiry into Powell for allegedly misleading Congress regarding the renovations of the Fed’s office buildings — something Congress itself has not accused Powell of doing. And if a secret vote were taken, and Republicans didn’t fear political retaliation from the president’s social media sallies and MAGA agitators, I bet it would be nearly unanimous.

Finally, and most importantly, Congress should restructure the Fed along the lines urged by Stanford law professor Michael McConnell, an eminent former federal appellate judge.

As McConnell points out, the Fed’s most consequential responsibilities are legislative in nature. They do not involve law enforcement, which is coercive; instead, the Fed uses its dominant market power to set interest rates by buying and selling securities.

The essential things the Fed does, and for which its independence must be preserved, are matters of policy involving interest rates, the money supply, the status of its balance sheet, and how to balance concerns about inflation and unemployment. These are not executive activities. Note that in Article I, Section 8, the Constitution assigns to Congress the powers to borrow money, regulate interstate and foreign commerce, coin and regulate the value of money, and make laws necessary and proper for carrying out those functions.

Regrettably, however, Congress has larded executive functions onto the Fed’s central-bank responsibilities. McConnell, for example, cites “making and enforcing consumer protection laws.” Other commentators point to bank examinations, compliance oversight, some regulation of corporations, and various enforcement mechanisms.

If the Federal Reserve were restructured such that the Fed was responsible only for the policy-making and banking activities that are not executive, and its executive functions were transferred to another administrative agency, then the president would have no viable constitutional claim of power to remove the Fed chairman or board members at will. There would be no doubt that Congress could protect the Fed’s independence from politics by imposing tailored “for cause” limitations on the president’s termination authority.

As is President Trump’s wont, he is trying to intimidate Powell because the law — naïvely assuming presidents will execute law faithfully rather than malevolently — gives him leverage points. So take away the leverage points.

I am under no illusion that it would be easy, given our deep partisan and ideological divisions, for bipartisan congressional leadership to formulate such legislation. Nor do I claim that President Trump would sign legislation that would diminish his authority unless he were persuaded that doing so was in his political interest.

The independence of the Federal Reserve is manifestly necessary. Moreover, it is sufficiently popular that even the Trump administration has conceded that the Fed is not included in its crusade to shore up the president’s authority to remove the heads of “independent” administrative agencies. The strategy I am recommending could motivate the president to beat a lawfare retreat; and these measures would be beneficial if adopted.