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The Dictatorship

Bringing charges against the Fed: What we do (and don’t) know

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Bringing charges against the Fed: What we do (and don’t) know

WASHINGTON (AP) — President Donald Trump has dramatically escalated his confrontation with the Federal Reserve, his Justice Department investigating and threatening a criminal indictment of the independent central bank and serving it with subpoenas.

The dispute is ostensibly about Fed Chair Jerome Powell’s testimony to Congress in June over the cost of a massive renovation of Fed buildings. But in a statement Sunday, Powell, abandoning his previous attempt to ignore Trump’s relentless criticism, called the administration’s threat of criminal charges “pretexts’’ in the president’s campaign to seize control of U.S. interest rate policy from the Fed’s technocrats.

Trump has repeatedly criticized Powell and the Fed for not moving faster to cut rates. Economists warn that a politicized Fed that caves in to the president’s demands will damage its credibility as an inflation fighter and likely lead investors to demand higher rates before investing in U.S. Treasurys.

Here’s what to know about the dispute:

The threat of charges arises from a $2.5 billion Fed renovation project

The $2.5 billion renovation of two Fed buildings in Washington dates back to Trump’s first term and attracted little attention for years. But over the summer, the administration began to complain about cost overruns in the project — criticisms that coincided with Trump’s increasing pressure on the Fed to slash interest rates to stimulate the economy.

Taxpayers are not footing the bill for the Fed renovations directly. Unlike other government agencies, which receive taxpayer money appropriated by Congress, the central bank is self-financed, drawing on interest from its massive holdings of Treasury debt.

The Fed says its headquarters, known as the Marriner S. Eccles building, desperately needed an upgrade because its electrical, plumbing and HVAC systems, among others, are nearly obsolete; some date back to the building’s construction in the 1930s.

The Fed is removing asbestos, lead and other hazardous elements from the building and installing modern electrical and communications systems. The H-shaped building, named after a Fed chair from the 1930s and ’40s, is located near some of Washington’s highest-profile monuments. The central bank is also renovating a building next door that it acquired in 2018.

The Fed has said: “The construction project identified key architectural features to preserve the historic integrity of the buildings, such as stonework, including marble, façades, meeting rooms, and other spaces. Historic preservation work in the Eccles Building also includes elevators that are original to the building, and historic conference rooms.″

The costs of the Fed overhaul have ballooned

Originally budgeted at about $1.9 billion, the project’s costs have swelled by $600 million.

The Fed cites many reasons for the greater expense. Construction costs, including for materials and labor, rose sharply during the inflation spike of 2021 and 2022. The project required more asbestos removal than expected. And Washington’s local restrictions on building heights forced it to build underground, which is pricier.

Because of the rising costs, the Fed’s board canceled planned renovations of a third building in 2024.

The Fed says the renovations will reduce costs “over time” because it will be able to pack its 3,000 Washington-based employees into fewer buildings and pay less rent.

At a Senate Banking Committee hearing in June, Chairman Tim Scott, a South Carolina Republican, claimed that renovation included “rooftop terraces, custom elevators that open into VIP dining rooms, white marble finishes, and even a private art collection.” In his testimony, Powell disputed those details, saying “there’s no new marble. … there are no special elevators.”

In July, Trump visited the building site and, while standing next to Powell, overstated the cost of the renovation. Still, Trump downplayed concerns later that day, saying “they have to get it done … Look, there’s always Monday morning quarterbacks. I don’t want to be that. I want to help them get it finished.”

When asked if the overruns amounted to a firing offense, Trump said, “I don’t want to put that in this category.”

But at a December 29 news conference, Trump said his administration would “probably” sue Powell for “gross incompetence” on the cost of renovations, calling it the “highest price of construction per square foot in the history of the world.”

The Supreme Court signaled last year that Trump can’t fire Powell simply over disagreements about interest rates. But he could do so legally “for cause,” such as misconduct or dereliction of duty.

The dispute seemed to have died down before flaring up again

The controversy over the renovations died down after the summer.

But Trump kept up his pressure on the Fed. In August, he said he was firing Fed governor Lisa Cook, an unprecedented step arising from allegations of mortgage fraud, which she has denied. Cook has sued to keep her job and courts have ruled she can remain in her seat while the case plays out. The Supreme Court will hear arguments in the case Jan. 21.

Trump has repeatedly used investigations — which might or might not lead to an actual indictment — to attack other political rivals, including New York Attorney General Letitia James and James Comey, the former FBI director.

Speaking briefly NBC News Sunday, Trump claimed that he knew nothing about the investigation into Powell. When asked if it is intended to pressure the Fed chair on rates, Trump said, “No. I wouldn’t even think of doing it that way.”

White House press secretary Karoline Leavitt told reporters that Trump did not direct his Justice Department to investigate Powell.

The subpoenas come at an unusual moment when Trump was teasing the likelihood of announcing his nominee this month to succeed Powell as the Fed chair. While Powell’s term as chair ends in May, he has a separate term as a Fed governor until January 2028.

Trump has been criticized for his own renovations

Trump has come under fire for his own decision to tear down the facade of the East Wing of the White House to put in a $250 million ballroom.

The 90,000-square-foot ballroom will dwarf the main White House itself: The Executive Mansion occupies just 55,000 square feet. Trump says the ballroom will accommodate 999 people.

Like the Fed’s project, Trump’s ballroom won’t cost taxpayers anything: It is being privately funded by “many generous Patriots, Great American Companies, and, yours truly,” Trump has said on social media.

The president argues that the White House needs a large entertaining space. He has complained about the capacity of the East Room, which can hold 200 people and is currently the largest space in the White House. He also objects to the practice of past presidents hosting state dinners and other events in tents on the South Lawn.

___

AP Economics Writer Christopher Rugaber contributed to this story.

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The Dictatorship

The Latest: US and Israel attack Iran as Trump says US begins ‘major combat operations’

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The Latest: US and Israel attack Iran as Trump says US begins ‘major combat operations’

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‘It’s fantastic’: Trump tells MS NOW he’s seen celebrations after Iran strikes

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President Donald Trump called the celebrations in the streets of Iran “fantastic” following the killing of the country’s supreme leaderAyatollah Ali Khamenei, during a brief phone call with MS NOW on Saturday night.

Trump told MS NOW that he’s seen the celebrations in Iran and in parts of America, after joint U.S.-Israel airstrikes killed Khamenei.

“I think it’s fantastic,” the president said of the celebrations. “I’ve seen them in Los Angeles, also — celebrations.”

“I’ve seen them in Los Angeles, celebrations, celebrations,” Trump said, accentuating the point.

The interview took place roughly 11 hours before the Pentagon announced the first U.S.military casualties of the war. U.S. Central Command said three American service members were killed in action, and five others had been seriously wounded.

Revelry broke out in Iran, the United States and across the globe on Saturday, with Iranians cheering the death of Khamenei, who led Iran with an iron fist for more than 30 years, cracking down on dissent at home and maintaining a hostile posture with the U.S. and Israel.

Asked how he was feeling after the strike on Khamenei, whose death was confirmed just a few hours earlier, Trump said it was a positive development for the United States.

“I think it was a great thing for our country,” he said.

The call — which lasted less than a minute — came after a marathon day, which began in the wee hours of the morning with strikes on Iran and continued with retaliatory ballistic missiles from Tehran targeting Israel and countries in the Middle East region that host U.S. military bases.

The day ended with few answers from the White House to increasing questions about the long-term future of Iran, how long the U.S. will continue operations there, and the metastasizing ramifications it could have on the world stage. In fact, the president has done little to convince the public to back his Iran operation, nor to explain why the country is at war without the authorization of Congress.

On perhaps the most consequential day of his second term, Trump did not give a formal address to the public, nor did he hold a press conference. Instead, he stayed out of public view at Mar-a-Lago, his private club and residence in Palm Beach, Florida, where he attended a $1 million-per-plate fundraising dinner on Saturday evening.

But throughout the day, Trump took calls from reporters at various new outlets, including from MS NOW at around 11 p.m. ET.

The strikes, known formally as “Operation Epic Fury,” came after months of talks over Iran’s nuclear program, and warnings from Trump that he would strike Tehran if they did not agree to his often shifting conditions.

At 2:30 a.m. ET on Saturday, Trump posted a video to social media announcing the operation, which he said was designed to “defend the American people by eliminating imminent threats from the Iranian regime, a vicious group of very hard, terrible people.”

“The lives of courageous American heroes may be lost and we may have casualties. That often happens in war,” Trump said when he announced the strikes on Iran.

Mychael Schnell is a reporter for MS NOW.

Laura Barrón-López covers the White House for MS NOW.

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Pentagon announces first American casualties in Iran

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Pentagon announces first American casualties in Iran

Three U.S. service members were killed and five seriously wounded as the United States and Israel launched attacks on Iran, U.S. Central Command said Sunday morning.

The three service members — the first Americans to die in the conflict — were killed in Kuwait, a U.S. official said.

Several others sustained minor injuries from shrapnel and concussions but will return to duty, the Pentagon said. The identities of the dead and wounded have not been made public.

“The situation is fluid, so out of respect for the families, we will withhold additional information, including the identities of our fallen warriors, until 24 hours after next of kin have been notified,” Central Command said in a statement.

The U.S. and Israel launched sweeping airstrikes on Iranon Saturday, killing Ayatollah Ali Khameneithe country’s supreme leader for nearly four decades. Iran has vowed retaliation and hit several U.S. military bases across the region.

According to U.S. Central Command, Iran has also attacked more than a dozen locations, including airports in Dubai, Kuwait and Iraq, and residential neighborhoods in Israel, Bahrain and Qatar.

Israel Defence Forces said Sunday that Iran fired missiles toward the neighborhood of Beit Shemesh, killing civilians. The missile hit a synagogue, killing at least nine people, according to the Associated Press.

AP reported that authorities said at least 22 people were killed and 120 others wounded when demonstrators tried to attack the U.S. Consulate in Karachi in Pakistan.

The violence came after the United States and Israel attacked Irankilling its Supreme Leader Ayatollah Ali Khamenei. Police and officials at a hospital in Karachi said that at least 50 people were also wounded in the clashes and some of them were in critical condition.

On Sunday, Israel Defence Forces said on X, “It’s official: All senior terrorist leaders of Iran’s Axis of Terror have been eliminated.”

President Donald Trump told CNBC’s Joe Kernen on Sunday that the operation in Iran is “moving along very well, very well — ahead of schedule.”

In a phone call with MS NOW late Saturday, Trump called the celebrations in the streets of Iran “fantastic” following the killing of Khamenei.

Confirming Khamenei’s death, Prime Minister Benjamin Netanyahu said Sunday: “We have eliminated the tyrant Khamenei and dozens of senior figures of the oppressive regime. Our forces are now striking at the heart of Tehran with increasing intensity, set to escalate further in the coming days.”

The exchange of hostilities comes after weeks of fragile negotiations between the U.S. and Iran over Iran’s nuclear operations.

Esmail Baghaei, a spokesperson for Iran’s foreign ministry, called the joint U.S-Israeli attack an “unprovoked, unwarranted act of aggression” in an interview with MS NOW’s Ali Velshi on Sunday. He said Iran’s nuclear program has been used a pretext for the attack.

“We have every right to defend our people because we have come under this egregious act of aggression,” Baghaei said.

Trump announced the attack early Saturday during a short video posted on his Truth Social account. He called for an end to the Iranian regime and urged Iranians to “take back the country.”

Negotiators and mediators from Oman were supposed to meet in Vienna on Monday to discuss the technical aspect of a potential nuclear deal.

Rep. Eric Swawell, D-Calif., told MS NOW’s Alex Witt on Sunday afternoon that the president’s military operation in Iran was illegal, echoing what many lawmakers have said in citing that under the U.S. Constitution only Congress can declare war.

“This is a values argument. We don’t just lob missiles into other countries when we are not provoked, attacked and have no plan for what comes next,” he said.

“We have been shown zero evidence that anything changed in Iran from last year when the president did not come to Congress and took a strike on Iran,” Swalwell said.

In June the U.S. struck three Iranian nuclear sites. Trump said the facilities had been “completely and totally obliterated.” But experts and U.S. officials said the sites were damaged but not destroyed.

Erum Salam is breaking news reporter for MS NOW, with a focus on how global events and foreign policy shape U.S. politics. She previously was a breaking news reporter for The Guardian and is a graduate of Texas A&M University and the Columbia University Graduate School of Journalism. Follow her on X, Bluesky and Instagram.

Akayla Gardner is a White House correspondent for MS NOW.

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