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According to sources from the New York Times, there is a federal criminal investigation that has been opened against Jerome Powell, who is the Federal Reserve Chair. The investigation is looking at whether he broke any federal laws by not following the rules on ethics or disclosing information about his personal financial dealings and possible conflicts of interest while serving in the central bank.
The
inquiry, still in its early stages, is being led by the Department of Justice’s
Public Integrity Section, which handles cases involving potential misconduct by senior government officials. While no charges have been filed, officials
familiar with the matter said investigators are examining Powell’s
financial disclosures, communications with financial institutions, and possible
coordination with Fed policymakers around sensitive economic decisions.
It is
alleged that Powell or his associates made some money out of the decisions that
were made by the Federal Reserve in the recent past, especially those touching on COVID-era
stimulus programs and aggressive-interest rate manoeuvres.
Unprecedented
Scrutiny of America’s Central Bank
This is an
exceptional moment in American financial history because it is very rare for a
sitting Federal Reserve Chair to be investigated for criminal activities. For
many years, the Federal Reserve has been seen as an independent economic body
that does not follow the usual politics or get involved in legal matters.
Nonetheless,
this follows widespread public outrage and congressional criticism over ethical
breaches at the central bank, following the departure of some top Fed officials
in 2022 due to questionable trading activities. That scandal forced Powell
himself to introduce tougher regulations prohibiting high-ranking Fed officers
from having personal stocks or engaging in such trade during policy
meetings, reforms aimed at rebuilding public confidence, which he supported.
Now, with
Powell under investigation, those very reforms could come back under the
microscope. Analysts say the probe threatens to undermine confidence in the
Federal Reserve at a delicate moment for the economy, with inflation cooling
but growth slowing under tighter monetary conditions.
Political
and Market Fallout
The WhiteHouse declined to comment, but insiders say the Biden administration has been
briefed on the situation and is monitoring it closely. On Capitol Hill,
reactions have been mixed: some lawmakers have urged restraint until more facts
are known, while others are calling for greater oversight of the Fed’s internal
governance.
Financial
markets reacted swiftly, with the Dow Jones and S&P 500 dipping in early
trading as investors digested the potential implications of a criminal probe
involving the nation’s top central banker. Economists warn that extended
uncertainty could weigh on monetary policy stability and investor sentiment.