Scott Bessent Links Powell Probe to Construction Incompetence, Calls for Fed Overhaul

TLDR:

• Justice Department launches criminal probe into Powell over congressional testimony on renovations.
• Bessent calls Federal Reserve overhaul essential, citing lack of accountability despite market influence.
• Trump completes final interviews for Powell replacement, announcement expected before or after Davos trip.
• Kevin Hassett removed from Fed chair race as Trump prefers him to stay as Economic Council director.

Treasury Secretary Scott Bessent attributes the ongoing criminal investigation into Federal Reserve Chairman Jerome Powell to construction-related issues. 

The probe centers on Powell’s congressional testimony regarding headquarters renovations.

Federal Reserve Faces Criminal Investigation Over Renovation Testimony

The Department of Justice has initiated a criminal investigation into Powell’s statements to Congress. 

The inquiry focuses on whether Powell misrepresented the scope of renovation work at the Federal Reserve’s Washington headquarters. U.S. Attorney for the District of Columbia Jeanine Pirro approved the probe.

Speaking on “Kudlow,” Bessent stated he lacks expertise in construction matters. “I don’t know anything about construction, seemingly not many people at the Fed do,” he said.

The Treasury secretary refrained from offering detailed commentary on the ongoing investigation. However, he emphasized the Federal Reserve requires substantial institutional reforms.

Bessent has consistently advocated for enhanced transparency at the central bank. “It does need a thorough overhaul,” he told FOX Business host Larry Kudlow. 

“It has a tremendous amount of sway and influence over their lives, but there is no accountability,” he added. The Treasury secretary views the current investigation as a potential catalyst for institutional review.

Powell responded to the investigation through a video message posted by the Fed. He characterized the probe as unprecedented in the institution’s history. 

“This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions,” Powell said. He warned against monetary policy direction through political pressure or intimidation.

Trump Administration Eyes Powell Replacement as Final Interviews Conclude

President Trump has repeatedly criticized Powell’s performance as Federal Reserve chairman. “He’s frequently expressed his disappointment with Chair Powell,” Bessent said. 

The administration has completed final interviews for Powell’s potential successor. Trump indicated an announcement would occur in January.

Kevin Hassett was previously considered a leading candidate for the position. However, Trump expressed preference for Hassett to continue as National Economic Council director. 

“I actually want to keep you where you are, if you want to know the truth,” Trump said. “If that’s the president’s prerogative, then so be it,” Bessent responded regarding the decision.

The Treasury secretary revealed limited insight into Trump’s selection process. “President Trump hasn’t shared his thoughts with me,” he said. 

Nevertheless, Bessent praised Trump’s deliberative approach to the decision. “He has been very deliberate and asked exactly the questions that the markets would want to ask,” Bessent noted.

Trump seeks a chairman capable of managing the Federal Reserve’s extensive operations. “I’d expected that we would have a decision either before he leaves for Davos or when he returns,” Bessent said.