The White House has escalated its long-running war against the Federal Reserve, moving from public insults to direct accusations of illegal conduct. In a letter posted to social media, the President’s own budget director, Russell Vought, accused Federal Reserve Chair Jerome Powell of breaking the law and lying to Congress about a planned renovation of the central bank’s headquarters.

This is not a simple dispute over construction costs. It is a dangerous and calculated escalation designed to undermine the bedrock principle of an independent central bank. The administration’s new tactic—using the specter of official investigation as a weapon—raises profound questions about the use of administrative power to threaten and politically capture America’s most critical economic institution.

From Insults to Investigation: A Shift in Tactics

For months, the President has engaged in a relentless campaign of public pressure, berating the Fed Chair he once appointed with names like “stupid person” and “Too Late” for not cutting interest rates as aggressively as the White House demands. This week, the strategy pivoted. The attack is no longer just rhetoric; it is now an official action from the President’s Office of Management and Budget (OMB).

Vought’s letter accuses Powell of mismanaging the Fed’s finances and providing false testimony to Congress regarding the details and rising costs of a planned $2.5 billion renovation of the Fed’s headquarters.

By accusing the Fed Chair of lying and breaking federal oversight regulations—a charge complicated by the fact that the Fed operates under its own budget and rules—the administration has moved the conflict into a new, more perilous phase.

The “For Cause” Doctrine: A Constitutional Battleground

This new line of attack appears to be a direct attempt to build a legal pretext for a “for cause” firing. The Federal Reserve Act, passed by Congress to ensure the central bank’s independence, stipulates that a president can only remove a Fed governor (including the Chair) “for cause.”

Historically and legally, this is an extremely high bar. It has been understood to mean actual malfeasance or gross neglect of duty, not a policy disagreement.

A president cannot fire a Fed Chair simply for refusing to lower interest rates.

However, accusations of breaking the law or lying to Congress, if substantiated, could be used to construct a “for cause” argument. This is the constitutional battleground: the administration seems to be searching for a legal justification to do what it cannot do for purely political reasons—remove the head of an independent institution who refuses to bow to its will.

The Paradox of Presidential Pressure

This campaign, however, may have the opposite of its intended effect. As policy analysts have warned, the relentless pressure on the Fed’s independence is itself a major risk to the economy. The entire global financial system is built on the faith that the U.S. Federal Reserve is a stable, apolitical institution that makes decisions based on data, not political threats.

If financial markets begin to believe the Fed has lost its independence and is under the political control of the White House, confidence in the U.S. economy could evaporate. As former Fed Vice Chair Alan Blinder has noted, this could raise inflationary expectations, forcing the markets themselves to raise long-term interest rates.

The very act of trying to bully the Fed into cutting rates could, paradoxically, make borrowing more expensive for all Americans.

Whether this campaign is a calculated plot to oust Jerome Powell or simply the President “venting his frustrations,” as one White House official claimed, the damage is already being done.

The health of the American economy depends on the world’s faith in the integrity of its core institutions. The current assault on the Federal Reserve fundamentally undermines that faith. The real cost here is not the $2.5 billion for a building renovation, but the priceless credibility of the nation’s central bank, an asset that, once lost, is nearly impossible to recover.