Treasury Secretary Scott Bessent warned President Trump that the federal investigation into Federal Reserve Chair Jerome Powell has already “made a mess” and risks unsettling financial markets, Axios reports.
Bessent, described by sources as visibly frustrated, told Trump the probe could have negative consequences for investor confidence and the broader economy.
His concerns appeared to play out quickly: On Monday, the dollar fell while bond yields and gold prices rose, reflecting market unease over potential political interference in the Fed.
“The secretary isn’t happy, and he let the president know,” one source told Axios.
The investigation, launched by the U.S. attorney’s office in Washington, D.C., centers on allegations that Powell misrepresented the costs of renovations to the Federal Reserve’s headquarters.
Sources said the probe was initiated without advance notice to the Treasury Department, senior White House officials, or the main Justice Department — an unusual move that has added to internal tensions.
Trump, for his part, appeared to distance himself publicly from the investigation late Sunday, telling NBC News he did not know about subpoenas that had been issued.
Still, he took a swipe at the Fed chair, saying Powell was “certainly not very good at the Fed, and he’s not very good at building buildings.”
The investigation itself is unprecedented and has triggered a forceful response from Powell.
In a rare video statement Sunday night, the Fed chair denied wrongdoing and accused the Trump administration of weaponizing the Justice Department because he had not lowered interest rates as aggressively as Trump wanted.
“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president,” Powell said.
The probe has also drawn concern on Capitol Hill. Sen. Thom Tillis, R-N.C., a key member of the Senate Banking Committee, said he would block any action on Powell’s replacement while the investigation is underway, arguing that the Justice Department’s credibility is now in question.
POWELL ‘DUG IN’
Beyond the immediate market reaction, Bessent’s warning to Trump reflected a deeper strategic concern inside the administration. Powell’s term as Fed chair ends in May, and officials had hoped he might step aside earlier once Trump named a successor.
Bessent believed that would happen — until now.
“He thought that when the president named a new Fed chair, that Powell would go. But now that’s not going to happen,” one source said. “Now [Powell is] dug in. This really made a mess of things.”
A Treasury Department spokesperson pushed back on reports of internal discord, saying there is “zero daylight between Secretary Bessent and President Trump,” and insisting the sources do not speak for the secretary. Sources familiar with the call said Bessent did not question the need for an investigation or defend Powell personally, but focused on the broader fallout.
Attention has also turned to how the investigation began. Senior administration officials believe the idea was partly driven by Federal Housing Finance Agency Director Bill Pulte, though Pulte denied that in an interview with Bloomberg Television.
“The DOJ is outside of my purview. This is out of my purview. I don’t know anything about it,” Pulte said.
Pulte has a reputation within the administration for pushing aggressive legal actions, including urging criminal cases against former FBI Director James Comey and New York Attorney General Letitia James — efforts that have gone nowhere.
While Pulte has clashed with Bessent in the past, sources said the Treasury secretary’s anger over the Powell probe was not rooted in that history.
What’s next: Trump’s comments suggest he is unlikely to rein in the investigation, even as he appears to respect Bessent’s warning.
“He didn’t tell Pirro to do it. But I can’t say he’s going to tell her to withdraw it,” one source said. “The president is angry with Powell. What can I say?”
Another source said Trump learned of the subpoenas after they were issued, but that U.S. Attorney Jeanine Pirro would not have proceeded without some indication the president would be supportive.
Officials believe that signal may have been conveyed during a meeting last week in Florida between Trump and Pulte at Mar-a-Lago.
A Justice Department spokesperson declined to comment, citing policy on ongoing investigations. One administration source, however, said bluntly that Pirro “went rogue.”
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