CNN Inside Politics An Unprecedented Threat
Jan 12, 2026
A criminal investigation by Trump's Justice Department into Fed Chair Jerome Powell sparks a heated response. Powell denounces threats to Fed independence and warns against politicizing monetary policy. The panel discusses Trump’s long-standing criticism of Powell, including pressure to cut rates. Former Fed chairs defend the rule of law while market reactions and political motives surrounding housing affordability are explored. Elizabeth Warren argues for a bold Democratic strategy focused on everyday costs to appeal to voters.
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DOJ Probe Threatens Fed Independence
- The Justice Department opened a criminal probe into Federal Reserve renovations, prompting an extraordinary public rebuke from Jerome Powell.
- Powell framed the move as political retaliation aimed at undermining Fed independence and monetary-policy decisions.
Fed Independence Underpins Economic Stability
- Experts say Fed independence is foundational to preventing political manipulation of monetary policy that would fuel inflation.
- Removing insulation would risk short-term politicking that harms long-term economic stability.
Leverage Senate Confirmation Power
- Capitol Hill can use advice-and-consent power to check presidential influence over the Fed by threatening to block nominations.
- Senators like Tom Tillis pledge to oppose future Fed appointees until the situation is resolved.