Trump says he wants to keep Hassett in White House, clouding Fed chair selection

President Trump indicated he prefers to keep Kevin Hassett as Director of the National Economic Council, potentially impacting the search for a new Federal Reserve chair to replace Jerome Powell, whose term ends May 15. Trump's comments have boosted the prospects of Kevin Warsh, a former Fed governor, for the position. The Justice Department's recent subpoenas of the Federal Reserve, revealed by Powell, have also influenced the selection process. Powell claimed the subpoenas were retaliation for the Fed's refusal to lower interest rates as sharply as Trump desired, sparking controversy and concerns about the Fed's independence. This backlash may reduce Hassett's chances, as the Senate worries about political interference.

The Justice Department is investigating Federal Reserve Chair Jerome Powell regarding potential false testimony to Congress about the scope of renovations to the Fed's headquarters. The investigation stems from accusations that the Fed mishandled the project, with Trump allies alleging a lack of transparency. Despite the investigation and Trump's past threats of legal action, economic advisor Kevin Hassett anticipates "nothing to see here," suggesting Powell is truthful about cost overruns being related to issues like asbestos. Hassett stated he wished the Fed had been more transparent. The investigation has drawn criticism, with former Fed chairs condemning it and international central banks expressing solidarity with Powell, warning of negative consequences for central bank independence.