Warren Says DOJ Dropped Powell Probe to Secure Installation of Trump 'Sock Puppet' as Fed Chair

The Justice Department on Friday dropped its criminal investigation into US Federal Reserve Chairman Jerome Powell, but Sen. Elizabeth Warren warned in response that the threat to the central bank's independence is far from over.

Shortly after US Attorney Jeanine Pirro announced on that her office was abandoning its months-long investigation of Powell for now, Warren released a statement cautioning that the end of the widely condemned probe didn't mean an end to President Donald Trump's efforts to take over the Federal Reserve.

Warren pointed out that while Pirro was no longer investigating Powell, the Justice Department is still investigating Federal Reserve Gov. Lisa Cook, whom Trump has unsuccessfully tried to fire.

"Let’s be clear what the Justice Department announced today," said Warren. "They threatened to restart the bogus criminal investigation into Fed Chair Powell at any time while failing to drop their ridiculous criminal probe against Governor Cook. Anyone who believes Donald Trump’s corrupt scheme to take over the Fed is over is fooling themselves."

Warren concluded by saying that the US Senate should not move forward with the confirmation of Kevin Warsh, a financier whom Trump nominated to be Powell's replacement.

“This is just an attempt to clear the path for Senate Republicans to install President Trump’s sock puppet Kevin Warsh as Fed chair," the Massachusetts senator said.

Sen. Andy Kim (D-NJ) echoed Warren's criticisms, and said that dropping the Powell investigation wasn't enough to make him believe the president had given up on his quest to control US monetary policy.

"Trump wants a Fed chair that will do his bidding," wrote Kim. "He'll drop the bogus investigation into Powell but not Lisa Cook because it clears the path for Senate Republicans to confirm Kevin Warsh, Trump’s pick for Fed chair. You deserve a Fed that works for you, not Donald Trump."

Democrats on the House Judiciary Committee also called foul on the Trump DOJ's machinations, writing in a social media post that the entire investigation into Powell "was just a political tactic and had nothing to do with evidence of a crime."

"The White House is using criminal prosecutions to free up spots on the Federal Reserve Board so the President can manipulate the money supply to cover up for his disastrous economic policies," the House Judiciary Democrats wrote. "And US Attorney Jeanine Pirro is content to abuse the grand jury process to attack Trump's chosen political targets."

University of Michigan economist Justin Wolfers delivered a warning for Sen. Thom Tillis (R-NC), who had vowed to hold up Warsh's confirmation until the probe of Powell was dropped, to resist the temptation to believe the investigation's end meant the crisis was over.

"While I admired Tillis' stand for Fed independence, this was always the problem with his strategy," Wolfers explained. "The president can meet Tillis' threshold of promising not to jail this end-of-term Fed chair, but he's kept open the option of threatening to jail the next one. The threats will continue unless the Senate refuses to confirm any nominee without clear legislation outlawing it. Congress has a role to play."

While Pirro is no longer investigating Powell, White House Press Secretary Karoline Leavitt said this didn't mean the probe had ended, but had been transferred to the Federal Reserve inspector general.

"The case is not necessarily dropped, it's just being moved over to the inspector general," Leavitt told reporters. "This has been a priority for the president. The investigation still continues."

This prompted Warren to reiterate that the Senate should not move forward with any vote to confirm Warsh as Federal Reserve chairman.

"Trump's spokeswoman says the witch hunt against Jerome Powell 'still continues,'" Warren wrote. "No Republican claiming to care about Fed independence should move Warsh’s nomination forward."

Trump for the last year has publicly attacked Powell for not aggressively cutting interest rates. Powell, who was nominated by Trump to be chairman of the Federal Reserve in 2017, has refused to cave into the president's pressure campaign, and has pointed to the Trump administration's own policies—in particular its global tariffs on imported products—as putting upward pressure on inflation.

Powell's term as chairman expires on May 15.