Inside Trump's Unprecedented Pressure Campaign on the Fed and Jerome Powell | FRONTLINE

0:02 If he wanted to get rid of Powell,

0:04 Trump was going to need to demonstrate cause, not just his policy frustrations.

0:12 J Pal back on Capitol Hill today in front of the Senate Finance Committee.

0:16 That alleged cause would emerge at a routine hearing before Congress in June.

0:20 Good morning.

0:21 Thank you all for being here.

0:23 Thank you, Chair Powell, for joining us today for such a

0:26 twice a year, Chair Powell goes in front of lawmakers on the Hill

0:30 to talk about the Fed and answer questions about the economy.

0:34 But at the June hearing, things took a bit of a turn.

0:38 During this time of hardship,

0:40 the Fed has spent billions on lavish renovations to its DC offices.

0:45 Senator Tim Scott, one of President Trump's close allies, led the attack.

0:49 Tim Scott starts asking these questions

0:51 about the renovation of Fed headquarters.

0:54 We're talking about rooftop terraces,

0:56 custom elevators that open into VIP dining rooms,

1:00 white marble finishes, and even a private art collection.

1:04 The Federal Reserve headquarters was built in the 30s.

1:07 It's almost 100 years old.

1:09 The Fed had long been pushing this project to overhaul the building.

1:13 It was this massive sprawling project that was running $700 million over budget.

1:18 it becomes clear that one of the main lines of questioning

1:21 for these lawmakers is going to be about these renovations.

1:24 Would you take a few minutes, please,

1:25 and explain what's going on with the value of that building

1:28 and why why the cost seemed to be so exorbitant.

1:31 I came to understand how badly

1:33 the Eckles building really needed a serious renovation.

1:36 It never had one.

1:37 It was not really safe.

1:38 I think he bristled at the idea that the Fed

1:41 was embarking on this like absolutely extravagant undertaking.

1:47 There there no special elevators.

1:49 There's just they're old elevators that have been there.

1:51 Um there are no new water features.

1:53 There's no beehives and there's no uh and there's no roof terrace gardens.

1:58 Later in the hearing, Senator Scott cranked up the pressure.

2:02 Page 129 of the final plans reflected rooftop garden terraces.

2:07 The page 127 and 129 were where we

2:11 found the ornate water features and final plans.

2:14 the new elevators that drop board members off at the VIP

2:18 dining suite was page 37 of the final plans.

2:21 Some of those are just flatly misleading.

2:23 The idea of elevators, you know, we it's the same elevator.

2:25 It's been there since the building was built.

2:27 So that's that's a mischaracterization.

2:29 And some of those are no longer in the plans.

2:32 It was not in of itself inappropriate for Congress

2:34 to ask the Fed how much it was spending on renovations.

2:38 That being said, this was coming at a time when there

2:43 were a lot of reasons to worry about the Federal Reserve's independence.

2:47 I could be wrong without any question, but I don't want to be misled.

2:51 That's different.

2:54 Other allies of the president made the case on Fox Business.

2:58 I think there needs to be an investigation.

3:00 I think that maybe he lied to Congress.

3:02 I think I think things are going to get a lot worse

3:04 for Jerome Pal and it' just be better off if he resigned.

3:07 So at this time we see another Trump

3:11 administration official get into the fight and that's Bill

3:14 Py who's the head of a rather obscure financial

3:17 agency in DC called the Federal Housing Finance Agency.

3:23 We're just scratching the surface as to what

3:25 Chairman Pal's been up to and it's very concerning.

3:27 Bill Py is acting like the attack dog here.

3:30 this guy kind of just comes in off the sidelines and starts

3:33 heckling on a topic that really has no interaction with his agency

3:38 and that was the moment where it became quite clear

3:40 that they were trying to build some kind of case against Powell.

3:44 Is there any evidence that Powell tried to mislead or did mislead Congress?

3:48 No, there's no evidence that Powell tried to mislead Congress and lawmakers

3:52 on the committee that he spoke to at that hearing have said as much.

3:56 to Neil Qashqari at the Fed.

3:58 It was clear what it was all about.

4:00 I wasn't surprised because there had been so much

4:02 chatter from different administration officials about trying to find

4:05 some way to say that he has uh given them cause for the president to remove him.

4:10 Do you really think that the line of questioning was

4:13 sort of a pretext in order to get him out?

4:15 Oh, of course.

4:16 I mean, at this point, having now seen the pattern over and over again,

4:19 um they don't like our monetary policy.

4:21 And so, how do you change us from focusing

4:25 on our dual mandate goals and focusing on data and analysis?

4:28 You change the people who are doing the work.

4:31 Today, the president has decided to take a tour of the Federal Reserve

4:34 headquarters and it comes as there's

4:37 mounting criticism and scrutiny of Benture Powell.

4:40 Well, thank you very much everybody and it feels

4:43 very good actually to be back on a construction site.

4:46 A month after Powell's testimony,

4:48 President Trump made a surprise visit to Fed headquarters.

4:52 I watched it live.

4:53 I happen to have it on in my office when it when it happened live.

4:56 I just want to see one thing happen.

4:58 Very simple.

4:58 Interest rates have to come down.

5:01 And this was like I don't even know how to describe it.

5:04 It was so crazy.

5:05 Um um this was just such a kind of shocking turn of events.

5:10 Presidents don't visit the Fed.

5:11 That is like not a common thing whatsoever.

5:14 And so the circumstances were already quite bizarre.

5:18 And we're with the chairman as you know.

5:20 Chairman, come on over.

5:22 And we're just taking a look at what's happening.

5:25 You know, this was the first time that we had seen these two kind

5:28 of in the same camera frame since Trump

5:31 appointed him as chair all those years ago.

5:34 And Trump has said a lot of insulting things about Powell.

5:37 He's been calling him a ton of personal insults.

5:39 And here they were kind of going toe-to-toe about the costs of a building.

5:44 Do you expect any more additional cost overruns?

5:47 Don't expect them.

5:49 We're we're ready for him.

5:50 But

5:51 it was great theater, I must say.

5:53 And I remember watching Chair Pal's face.

5:59 It looks like it's about 3.1 billion.

6:01 It went up a little bit or a lot.

6:03 And you had several instances where the president would

6:08 say something and chair pal would would go like this.

6:12 I'm not aware of that.

6:13 Yeah, it just came out.

6:15 Yeah, I haven't heard that from anybody at the Fed.

6:19 Yeah, it just came out.

6:24 Our about 3.1 as well.

6:26 3.1 3.2.

6:27 This came from us.

6:29 Yes.

6:29 I mean, it it was things that for me were unthinkable.

6:34 Even when President Nixon attacked the Fed chair,

6:38 it was done behind closed doors.

6:40 But this was a conflict right there.

6:43 And it was very clear what the president was doing.

6:45 He was embarrassing Chair Pal.

6:47 I don't know who does that.

6:51 You're including the Martin renovation.

6:53 You just added an entire capital.

6:54 Yeah.

6:54 You just you just added in a third building is what that is.

6:57 That's a third building.

6:58 No, but it's it's a building that's being built.

7:00 No, it's been it was built 5 years ago.

7:03 We finished Martin 5 years ago.

7:05 It's part of the overall work.

7:07 It's not new.

7:09 Trump whether you know implicitly or explicitly was

7:14 inflating how bad of a problem it was.

7:17 I don't think that we have seen Trump

7:19 being factchecked by another member of the broader government.

7:23 And I think that is what made this interaction just so extraordinary.

7:30 As a real estate developer,

7:32 what would you do with a project manager who would be over budget?

7:37 Uh, generally speaking, what would I do?

7:39 I'd fire him.

7:41 Are there things are there things the chairman can say to you

7:43 today that would make you back off some of the earlier criticism?

7:47 Well, I'd love him to lower interest rates,

7:48 but other than that, other than that, what can I tell you?