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.
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https://www.axios.com/2026/01/12/bessent-trump-investigation-powell-federal-reserve