Scoop: Bessent told Trump that investigation of Fed chair creates a "mess"
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Treasury Secretary Bessent at a December meeting with President Trump. Photo: Alex Wong/Getty Images
A perturbed Treasury Secretary Scott Bessent told President Trump late Sunday that the federal investigation into the Federal Reserve chair "made a mess" and could be bad for financial markets, two sources familiar with the call told Axios.
Why it matters: Bessent's worries about the financial fallout were somewhat realized Monday, when the dollar dropped as bond yields and the price of gold rose amid worries about political interference in the Fed.
- "The secretary isn't happy, and he let the president know," one source familiar with Bessent's call to Trump told Axios.
- Sunday night, Trump appeared to distance himself from the investigation of Fed chair Jerome Powell for allegedly misrepresenting the costs of renovations to the Federal Reserve's headquarters in D.C.
- U.S. Attorney Jeanine Pirro's office in D.C. launched the probe without giving a heads-up to Treasury, top White House officials or the main Justice Department, sources told Axios.
Driving the news: The Powell investigation is without precedent.
- Powell on Sunday night made a rare video statement in which he denied any wrongdoing and accused the Trump administration of weaponizing the Justice Department because he hadn't supported lowering interest rates as much or as quickly 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.
- Sen. Thom Tillis (R-N.C.), a key member of the Senate Banking Committee, vowed to block any action on Powell's replacement because of the investigation and said DOJ's credibility is in question.
Zoom in: Bessent's concerns about the investigation aren't just rooted in the financial markets, sources say. Powell's term as chair ends in May, and the administration was hoping he would step down sooner once Trump nominated a replacement.
- Bessent "thought that when the president named a new Fed chair, that Powell would go. But now that's not going to happen," another source said. "Now [Powell is] dug in. This really made a mess of things."
A Treasury spokesperson told Axios, however, that "there is zero daylight between Secretary Bessent and President Trump. The sources in the story do not speak for the secretary."
- Bessent didn't question the need for a Powell investigation and wasn't defending the Fed chair in his talk with Trump, the sources tell Axios.
The intrigue: Senior administration officials told Axios they believe the idea for the criminal investigation was launched partly at the urging of Federal Housing Finance Agency Director Bill Pulte, who denied that to Bloomberg Television early Monday.
- "The DOJ is outside of my purview. This is out of my purview. I don't know anything about it, and I would defer you to the DOJ," Pulte told the outlet.
- Pulte has a reputation within the administration for overstepping, namely by pushing the president to get DOJ to criminally charge former FBI Director James Comey and New York Attorney General Leticia James, cases that so far have gone nowhere.
- Pulte also clashed with Bessent, but the Treasury secretary's annoyance at the Powell investigation wasn't rooted in any prior conflict, sources told Axios.
What they're saying: Trump told NBC News late Sunday that "I don't know anything about" the subpoenas that were issued — but he made sure to take a shot at Powell.
- "He's certainly not very good at the Fed, and he's not very good at building buildings," Trump told the outlet.
What's next: Those comments suggest that Trump probably won't rein in Pirro's investigation, insiders say, but his measured remarks also indicate he respects Bessent's position.
- Trump "didn't tell Pirro to do it. But I can't say he's going to tell her to withdraw it," one of the sources said. "The president is angry with Powell. What can I say?"
- Another source confirmed that Trump "heard about the subpoenas after" the fact, but that Pirro did not go "forward without a signal that he would be supportive."
- That signal, officials suspect, was relayed last week in a meeting in Florida between Trump and Pulte, who's a member of Trump's Mar-a-Lago club.
A DOJ spokesperson said the department doesn't comment on investigations, but an administration source said Pirro "went rogue."
- A spokesperson for Pirro's office couldn't be reached.
Go deeper: What's at stake in Trump's war on Powell
