White House adviser downplays DOJ probe into Fed chair amid succession fight

White House National Economic Council Director Kevin Hassett publicly downplayed a Department of Justice criminal inquiry into Federal Reserve Chair Jerome Powell on Jan. 16, saying he expected "nothing to see here." The inquiry, which Powell disclosed earlier this month, involves subpoenas tied to the Fed chair; no charges or prosecutorial decisions have been disclosed.

Hassett’s comments came as the White House and financial markets confronted competing pressures: the legal uncertainty surrounding Powell, the scramble to name a successor when Powell steps down in May, and partisan fights over economic data and agency leadership. Treasury Secretary Scott Bessent said he "can't comment on the ongoing investigation" and warned of "unanswered inquiries," adding that if prosecutors "get some answers and the answers are satisfactory, then we can move on." Those remarks underscored the administration’s cautious posture toward an investigation that remains thin on public detail.

The episode has complicated the search for a new Fed chair. President Donald Trump told Hassett at a White House event that he "actually want[ed] to keep you where you are, if you want to know the truth," adding "We don't want to lose him." The president has said he intends to announce his nominee in the coming weeks, but his expression of reluctance to part with Hassett upended expectations that the NEC director was the front-runner.

Reported contenders for the position include Hassett himself, former Fed governor Kevin Warsh, Federal Reserve Governor Christopher Waller, and Rick Rieder of BlackRock. Evercore ISI analyst Krishna Guha warned that the existence of subpoenas "is making it harder to confirm Hassett" and said Warsh "is trusted by Senate Republicans and would be much easier to confirm." Those dynamics highlight a practical constraint for any nominee: confirmation fights in the Senate are likely to hinge on perceived independence from the White House and the political fallout from the DOJ inquiry.

Hassett used his public appearances to press several political arguments that could shape confirmation debates. He pushed back against the idea that higher tariffs on consumer goods would drive inflation, saying aggregated measures of inflation were "lower than it’s been in five months" and arguing that inflation eased in part because "we’re no longer printing money and sending it to people like the Bidens did." He also defended President Trump’s decision to remove Bureau of Labor Statistics Commissioner Erika McEntarfer after a weaker-than-expected jobs report, telling Meet the Press that "what we need is a fresh set of eyes over the BLS." He did not produce public evidence to substantiate claims that the jobs numbers were manipulated.

Legal and institutional questions remain central. The publicly acknowledged subpoenas tied to Powell raise concerns among some observers that political pressure could threaten Federal Reserve independence, but specifics about the subpoenas’ subject matter, the offices that issued them, and the status of any prosecutorial decision are not publicly available. Markets initially seesawed on the developing story before regaining ground, reflecting investor sensitivity to potential disruptions at the Fed.

As the White House weighs candidates, the collision of a criminal inquiry, presidential preferences, and Senate confirmation politics is forcing a recalculation of how nominations will be managed and tested in public. The outcome will shape monetary policy leadership and test institutional guardrails meant to insulate the central bank from partisan entanglement.