The White House has dropped a criminal probe into one of Donald Trump’s main foes in a huge backflip for the US president.
On Friday, US time, the US Department of Justice said it would end an inquiry into cost overruns at the US central bank’s headquarters – an inquiry that was widely seen as an attempt by Donald Trump to pressure Jerome Powell, the bank’s governor.
Mr Trump has been vocal about his anger at Mr Powell who has resisted demands from the US president to lower interest rates by as much as he would like. He had threatened to sack him on multiple occasions – a power it’s doubtful the president has.
The US Federal Reserve is set up to be an independent institution which makes its own decisions without interference from the president of the day.
But Mr Trump has insisted that rates be cut be balance out tariff related price rises. But the Fed has been wary of stoking inflation.
On Friday, US time, former Fox News host Jeanine Pirro, who is now the US Attorney for Washington DC and was overseeing the investigation, said her department was dropping the probe.
Instead, she said, the Inspector General for the Federal Reserve had been “asked to scrutinise the building costs overruns – in the billions of dollars – that have been borne by taxpayers”.
“I expect a comprehensive report in short order and am confident the outcome will assist in resolving, once and for all, the questions that led this office to issue subpoenas,” she said.
“Accordingly, I have directed my office to close our investigation as the IG undertakes this inquiry.
“Note well, however, that I will not hesitate to restart a criminal investigation should the facts warrant doing so”.
The ending of the criminal investigation is a major turnaround for the White House, which hasn’t hesitated to target people Donald Trump dislikes or oppose him.
Legal experts doubted there was much of a case against Mr Powell.
However, many Republicans were also uncomfortable with the Justice Department’s investigation which they saw as an attempt to hobble the Federal Reserve’s independence.
Mr Powell’s term as the governor of the Federal Reserve ends next month.
Mr Trump has nominated Kevin Warsh as his replacement but he needs to get Senate approval.
At least one Republican had refused to vote for Mr Warsh while the criminal investigation was taking place. So a dropping of the probe may clear the way for Mr Trump’s prefer successor which could mean interest rates are lowered anyway.
