Biden Treasury Sec. Besent Warns Fed Probe Could Roil Markets, May Harder Powell to Yield
U.S. Treasury Secretary (reported as Besent) warned President Trump that a federal probe into Federal Reserve Chair Jerome Powell has become ’a mess’ and could unsettle financial markets. According to Axios-cited sources, the probe was launched by U.S. prosecutor Jeanine Pirro’s Washington office without advance notice to the Treasury, White House senior staff, or the Justice Department main office. Treasury concerns: the investigation may harden Powell’s stance and jeopardize an orderly transition when a new Fed chair is appointed, increasing market uncertainty. The Treasury secretary reportedly informed the president and expressed displeasure at how the probe was handled, though he did not dispute the investigation’s legitimacy. No cryptocurrencies or digital-asset projects are mentioned. The report emphasizes potential market volatility and political friction between the administration, Treasury, and law enforcement over the handling and communication of the probe.
Bearish
A high-profile federal investigation into the Fed chair increases political and policy uncertainty, which historically elevates risk-off sentiment across financial markets. Traders tend to reduce exposure to risky assets (including crypto) when central bank leadership or independence is questioned, since monetary policy expectations and liquidity conditions may become less predictable. The report that the probe was initiated without coordination and may harden Powell’s stance raises the chance of abrupt market reactions — news-driven volatility, widened spreads, and lower risk appetite. Comparable events: political interventions or investigations targeting central bankers (or similar governance shocks) have led to short-term market sell-offs and volatility spikes. Short-term impact: heightened volatility and potential price declines as traders reduce leverage and flee to safe havens. Long-term impact: depends on outcome — if probe fades without consequence, markets may recover; if it undermines Fed credibility or delays leadership transition, persistent uncertainty could weigh on risk assets and elevate risk premiums.