Trump's attacks on Fed Chair Jerome Powell are backfiring

The White House could install a new Federal Reserve chair within months if a criminal investigation into Fed Chair Jerome Powell launched by the Department of Justice was dropped. That's not happening.

Instead, both sides are digging in and ensuring a standoff with enormous significance for the future of monetary policy drags on with no end in sight. Powell's term might end on May 15 with him staying on as "chair pro tempore" — the opposite of what Trump set out to achieve.

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The latest salvo came Thursday when Trump suggested Powell was engaged in "criminality" over ongoing renovations at the Fed's aging Washington headquarters. The president had long attacked Powell since last year over the Fed not slashing interest rates more quickly to accelerate economic growth. "

He’s a stubborn, incompetent person… and he may be a dishonest guy," Trump told reporters in the Oval Office.

But there are signs that Trump's long-running campaign to pressure the Fed into compliance is backfiring and throwing the confirmation of his Fed chair nominee Kevin Warsh into limbo.

Only a day earlier, Powell stated his intent to remain as Fed chair while the federal investigation into him continues. "I have no intention of leaving the board until the investigation is well and truly over with transparency and finality," he said at a Wednesday news conference following the Fed's decision to hold interest rates steady. The central bank did so for the second meeting in a row.

Powell could choose to remain on the Fed's seven-member Board of Governors until 2028 even after his term as chair ends. If he does take that route, it would strip Trump of the opportunity to nominate another member more closely aligned with him on interest rate cuts. Powell hasn't said whether he intends to stay at the Fed once he steps aside as chair.

The investigation itself has faced judicial roadblocks. A federal judge squashed grand jury subpoenas into Powell last week, saying the case was driven by a desire to "to harass and pressure Powell either to yield to the president or to resign and make way for a Fed chair who will.""

The origins of the standoff can be traced to the DOJ in January opening a criminal probe into Powell regarding his Senate testimony on Fed upgrades costing $2.5 billion, an amount well over original spending forecasts. Powell called the investigation another form "intimidation" at the time and signaled he was not backing down.

Powell and Trump aren't the only ones firmly entrenching themselves.

North Carolina Republican Sen. Thom Tillis has said he won't be dislodged from his blockade against all Fed nominees until the Powell investigation comes to a close.

Tillis holds a tie-breaking vote on the Senate Banking Committee, the panel charged with processing key Fed nominees. He isn't necessarily alone in his decision to stick up for Powell.

Several Republican members of the Senate Banking Committee say they don't believe Powell committed a crime, a roster that includes Sen. Tim Scott of the South Carolina, who chairs the panel. The impasse over the Fed, though, is injecting uncertainty on Warsh's timeline to assume the Fed chairmanship.

No date has been set for his confirmation hearing.

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