As the Justice Department investigates Federal Reserve Chair Jerome Powell, CNBC’s Jim Cramer on Monday explained why he thinks Powell should not be prosecuted, adding that Wall Street’s doesn’t think the Justice Department will actually press charges.
“You don’t want to end up with a situation where the Fed Chief actually gets prosecuted, because that would end the very idea of Fed independence or Justice Department independence, for that matter,” he said.
Powell revealed Sunday evening that he’s under criminal investigation related to the $2.5 billion renovation of the central bank’s headquarters. Powell said the inquiry is a consequence of the Fed’s continued refusal to cut interest rates as fast as President Donald Trump has demanded. Powell indicated he would not bend to Trump’s wishes, and said will “continue to do the job the Senate confirmed me to do, with integrity and a commitment to serving the American people.”
Cramer stressed that Powell is not a criminal and does not belong in prison. He said investors believe it’s unlikely Powell will be prosecuted because they think to do so would be “nuts” and “very bad for stocks.”
He added that Wall Street also seems unconcerned with another presidential interference in the economy — Trump last week proposed a 10% cap on on the interest rate credit card companies can charge customers. That change would hinder millions of Americans from borrowing money, Cramer said, indicating a crash could occur if the companies had to stop lending.
But Wall Street isn’t concerned because the idea is “too over the top,” he said.
“The market just doesn’t believe Jay Powell will be prosecuted or the credit card companies will get hit with an interest rate cap,” he said. “I’m betting the market’s right.”
