How Susan Collins and Republicans are handling Trump’s Federal Reserve threat

President Donald Trump’s latest threat to fire Federal Reserve Chair Jerome Powell has put U.S. Sen. Susan Collins, R-Maine, and Republicans in another pickle.

Do they try to defend the nation’s central bank leader, or let Trump try to oust another official who has upset him?

For now, Collins and several Senate Republicans are standing by Powell and calling on the Trump administration to close its criminal probe into the Fed chair, an investigation tied to renovations of the central bank’s headquarters. That case is complicating Trump’s efforts to get Kevin Warsh, a previous Federal Reserve Board of Governors member whom Trump feels would support his calls to lower interest rates, confirmed as Powell’s successor.

Trump has repeatedly bashed Powell, whom he elevated to Fed board chair in 2018, for not lowering interest rates to his liking, which Trump believes would help a volatile economy. In a Fox Business interview that aired Wednesday, the Republican president threatened to fire Powell if he does not step down when his term as chair ends May 15.

“If he’s not leaving on time — I’ve held back firing him,” Trump said Wednesday. “I’ve wanted to fire him, but I hate to be controversial. I want to be uncontroversial.”

Collins said Thursday in a statement to the Press Herald that “any efforts to influence or coerce the Fed chair or undermine the Federal Reserve’s independence risk destabilizing our markets and having serious repercussions on public trust in our government.”

“I have always found him to be a man of integrity,” Collins said of Powell. “I do not think he should be threatened with removal or subject to a probe.”

Apart from the chair role ending next month, Powell’s term on the Fed’s governing board lasts until January 2028. He said in March he has “no intention” of leaving the board until the Justice Department concludes its investigation into allegations of cost overruns with a $2.5 billion renovation of the Federal Reserve headquarters in Washington.

During a hearing last month, a top deputy in U.S. Attorney Jeanine Pirro’s office conceded prosecutors had not found any evidence of a crime in their probe of the headquarters renovation. Trump said Wednesday he wants to continue the probe and referred to the costs as “probably corrupt, but what it really is, is incompetent.”

Additional drama unfolded Tuesday when a building contractor at the headquarters site turned away prosecutors from Pirro’s office who made an unannounced visit. A Fed board attorney followed up with an email to Pirro’s team that noted a federal judge has found their interest in the renovation project to be “pretextual.”

Trump’s insistence on continuing the investigation is complicating his efforts to get Warsh confirmed as the next Fed chair, and to pick a Powell replacement on the seven-member board that influences monetary policy.

Numerous GOP senators are not aligned with Trump on his vision for the Fed. U.S. Sen. Thom Tillis, a North Carolina Republican who is not seeking reelection this year, said he will block Warsh’s nomination from advancing out of the Senate Banking Committee until the probe ends.

The banking committee said it will hold a hearing next week on Warsh’s nomination. Tillis said not enough senators will back Warsh, and called the probe “bogus, ill-timed, ill-informed.” Warsh is a former Morgan Stanley executive who served on the Fed board from 2006 to 2011.

Collins, who is up for reelection this year, said in regard to Warsh that “it’s premature for me to make a decision on any nominee prior to his or her hearing unless I have personal knowledge of the nominee, which I do not in this case. “

Neither Collins nor U.S. Sen. Angus King, an independent who caucuses with Democrats, serve on the Senate Banking Committee.

King said in an interview Friday the “pretext” of using the construction project investigation to go after Powell is “laughable.”

“No politician should be anywhere near the power to set interest rates,” King said.

The Federal Reserve kept the federal benchmark rate steady at 3.5% to 3.75% in March for the second consecutive meeting amid the Iran war and higher-than-expected inflation, but the body has brought rates down since 2024, and signaled another reduction could come this year. But Trump wants more cuts and for them to happen, and faster.

King said Trump’s threats to Powell are part of a broader trend of the president and his Cabinet leaders purging various agency and military leaders.

“The pattern is beyond troubling and deeply dangerous,” King said.