Bill Pulte Seen as Key Instigator Behind Powell Subpoena (1)

Federal Housing Finance Agency Director Bill Pulte was a driving force behind the Trump administration’s decision to subpoena the Federal Reserve, according to people familiar with the matter, intensifying pressure on the central bank as President Donald Trump prepares to pick a new Fed chief.

Some of Trump’s allies were alarmed by the move, fearing a legal fight aimed at Fed Chair Jerome Powell will upset the bond market, some of the people said, requesting anonymity to discuss private talks within the administration. They are also concerned it will discourage Powell from leaving the Fed once his chairmanship ends in May. Powell can remain on as a Fed governor until 2028 and hasn’t yet said whether he intends to leave as is tradition.

Read More: Fed Served With DOJ Subpoenas, Powell Vows to Stand Firm

The head of the typically staid FHFA has been a vocal force within the administration, pushing controversial housing policy ideas and investigating Trump’s foes for mortgage fraud. Pulte submitted a criminal referral to the DOJ about Fed Governor Lisa Cook that is at the root of Trump’s push to fire her. The Supreme Court is set to take up the Cook case later this month.

A senior administration official said the DOJ, not Pulte, is behind the subpoena that relates to Powell’s congressional testimony about Fed building renovations. The investigation is being run by the US Attorney’s Office for the District of Columbia, according to people familiar with the matter.

US Attorney for DC Jeanine Pirro signed off on the investigation into Powell, some of the people familiar with matter said.

Early Monday, Pulte declined to comment on the investigation.

“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,” he said in an interview with Bloomberg Television.

WATCH: Federal Housing Finance Agency Director Bill Pulte said, “I don’t know anything about it,” when asked about the Federal Reserve being served grand jury subpoenas from the Justice Department.

Source: Bloomberg

Trump Comment

Attorney General Pam Bondi has directed US attorneys offices to look into cases of potential taxpayer abuse, said a person, who asked not to be identified discussing the probe.

Some of Trump’s senior aides didn’t know about the subpoena until Powell was served with it on Friday evening, according to some of the people.

In an interview with NBC News on Sunday, Trump denied having any knowledge of the DOJ’s investigation into the central bank.

Pulte flew down to Palm Beach, Florida, with the president on Friday night. He is a member at Mar-a-Lago and frequents the club and Trump’s nearby golf course when the president is there for the weekend.

Read more: Modeling a Hit to Fed Independence

Trump aides and allies are working through the ramifications of targeting Powell and its potential unintended consequences. Among the questions are how Wall Street reacts Monday morning to what is likely to be perceived by bond markets as a threat to the Fed’s independence. It also casts uncertainty about what this means for Trump’s efforts to replace Powell with a new leader at the central bank.

The president has said he has made up his mind about who he’s going to pick to be the next central bank leader, but he hasn’t announced it publicly. Top contenders include White House National Economic Council Director Kevin Hassett and former Fed Governor Kevin Warsh.

Earlier: Bessent Says Trump May Decide on Fed Before or After Davos

The subpoena has already drawn strident criticism from Democrats, and Republican Senator Thom Tillis of North Carolina.

“If there were any remaining doubt whether advisers within the Trump Administration are actively pushing to end the independence of the Federal Reserve, there should now be none. It is now the independence and credibility of the Department of Justice that are in question,” said Tillis, a member of the Senate Banking Committee.

Tillis said he will oppose the confirmation of any nominee for the Fed “until this legal matter is fully resolved.” Opposition from Republican senators could slow or prohibit Trump’s Fed pick from getting Senate confirmation — a required step before they can assume the chair role at the central bank.

--With assistance from Josh Wingrove, Annmarie Hordern, Jonathan Ferro, Lisa Abramowicz and Christopher Anstey.

To contact the reporters on this story:
Nancy Cook in Washington at ncook40@bloomberg.net;
Saleha Mohsin in Washington at smohsin2@bloomberg.net;
Joshua Green in Washington at jgreen120@bloomberg.net

To contact the editors responsible for this story:
Margaret Collins at mcollins45@bloomberg.net

Magan Crane, Laura Davison

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