(Bloomberg) — President Donald Trump’s top economic adviser called on former Federal Reserve Chairman Jerome Powell to leave the central bank’s board after an internal report found management failures in renovating its headquarters.
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“I think it’s time for him to move forward and respect the independence of the Fed,” Kevin Hassett, head of the National Economic Council at the White House, said on Fox News’ Sunday Morning Futures when asked whether Powell should resign.
The Fed’s internal watchdog said in a Sept. 30 report that it found no evidence of foul play and identified no “administrative misconduct” related to the $2.4 billion Washington renovation project, but cited management deficiencies that helped nearly double the project’s original cost.
Trump responded with a social message saying that Powell, who he had relentlessly pressured to lower interest rates as Fed chairman, “should be forced to resign from the board.”
U.S. Attorney General Todd Blanche, who Trump asked to review the Fed inspector general’s report, said in an interview Friday that the Justice Department would not reopen a criminal investigation into Powell based on the findings.
The Fed said it would hire an independent auditor to review construction costs. Blanche added that if this review reveals evidence of criminal wrongdoing, the Justice Department could investigate.
“I would expect there to be an audit process,” Blanche said. “If they learn something that amounts to any form of criminal misconduct, you better believe we’re going to investigate it.”
Powell has been on the Fed’s board of governors since stepping down as chairman in May, breaking with the precedent of Fed presidents leaving the central bank at the end of their leadership tenure.
Powell said threats of criminal investigations against him and the Federal Reserve left him no choice but to stay, a stance that Trump and others in his administration have condemned.
While Trump has long pressed the Fed to reduce borrowing costs, policymakers led by Chairman Kevin Warsh voted unanimously last month to raise interest rates by a quarter of a percentage point in the face of stubborn inflation.
“As you saw, Chairman Warsh voted with the people to raise interest rates,” Hassett told Fox News. “I don’t agree with this decision, but we respect that he did this for the right reasons.”
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