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The Trump administration’s criminal investigation of Federal Reserve Chair Jerome Powell appeared on Monday to be emboldening defenders of the U.S. central bank against the efforts of President Donald Trump to control the Fed. The backlash reflected the bigger stakes of a contest about the fate of the Feds independence, the balance of power within the federal government, and the path of the U.S. economy. Trump has long publicly lashed out against Powell for not slashing the Fed’s benchmark interest rates to his liking, but the prospect of a criminal indictment was a step too far for an institution that has an outsized influence on both inflation and the job market. Several Republican senators have condemned the Department of Justice’s subpoenas of the Fed, which Powell revealed Sunday and characterized as pretexts to pressure him to sharply cut interest rates as Trump has demanded. Powell also said the Justice Department has threatened criminal indictments over his June testimony to Congress about the cost and design elements of a building renovation. Trump has repeatedly used investigations which might or might not lead to an actual indictment to attack his political rivals, including Fed governor Lisa Cook, New York Attorney General Letitia James, and James Comey, the former FBI director. White House press secretary Karoline Leavitt told reporters that Trump did not direct his Justice Department to investigate Powell. One thing for sure, the president’s made it quite clear, is Jerome Powell is bad at his job,” Leavitt said. “As for whether or not Jerome Powell is a criminal, that’s an answer the Department of Justice is going to have to find out. A bipartisan group of former Fed chairs and top economists on Monday compared the Trump administration’s actions to moves made in more impoverished countries. Some analysts said that the financial market’s muted response reflects a widespread belief that Powell could successfully fend off the allegations that his description to lawmakers of the Fed’s $2.5 billion project was criminal. I think this is ham-handed, counter-productive, and going to set back the presidents cause, said Jason Furman, an economist at Harvard and former top adviser to President Barack Obama. It could also unify the Feds interest-rate setting committee in support of Powell, and means the next Fed chair will be under more pressure to prove their independence. The subpoenas apply to the price tag of renovating Fed buildings, including its marble-clad headquarters in Washington, D.C. They come at an unusual moment when Trump was teasing the likelihood of announcing his nominee this month to succeed Powell as the Fed chair, after Trump last summer played down the idea that the Fed’s renovation costs were a fireable offense. While Powell’s term as chair ends in May, he has a separate term as a Fed governor until January 2028. Trumps moves could make it more likely that Powell will stay on the Feds governing board after his term as chair ends in May in order to defend the Fed’s independence from politics in making its decisions on interest rates, Furman said. While an interest rate cut was already considered unlikely at the Feds next meeting in about two weeks, the news of the Justice Department investigation likely means that the Fed would avoid cuts at the next meeting in order to send the message that it cannot be pressured by politics, economists said. Powell quickly found a growing number of defenders among Republicans in the Senate, who will have the choice of whether to confirm Trump’s planned picks for Fed chair. Sen. Thom Tillis, a North Carolina Republican and member of the Senate Banking panel, said late Sunday in response to the subpoenas that he would oppose any of the Trump administrations nominees for the Fed, including to replace Powell. If there were any remaining doubt whether advisers within the Trump Administration are actively pushing to end the independence of the Federal Reserve, there should now be none, Tillis said. Sen. Lisa Murkowski, an Alaska Republican, backed Tillis approach Monday. After speaking with Chair Powell this morning, its clear the administrations investigation is nothing more than an attempt at coercion, Murkowski said. She voted against the White Houses nomination of Stephen Miran to the Feds board in September, which was barely approved by a 48-47 vote. Miran continues to be Trump’s chair of the White House Council of Economic Advisers, although he is on leave due to his post at the Fed. Trump has for the past year sought to pressure Powell into having the Fed slash its benchmark interest rates a move that reflects a fundamental break over whether inflation still poses any risk to the U.S. economy. Powell maintains that inflation is still elevated in the aftermath of Trump’s tariffs and has moved cautiously, whereas Trump claims that inflation is no longer a worry and rates should be dramatically slashed. I have carried out my duties without political fear or favor, focused solely on our mandate of price stability and maximum employment, Powell said in a Sunday night video disclosing the subpoenas. Public service sometimes requires standing firm in the face of threats. If Powell stays on the board after his term as chair ends in May, the Trump administration would be deprived of the chance to fill another seat on the board. Powell has declined at several press conferences to answer questions about his plans. Asked on Monday by reporters if Powell planned to remain a Fed governor, Kevin Hassett, director of the White House National Economic Council and a leading candidate to become Fed chair, said he was unaware of Powells plans. Ive not talked to Jay about that, Hassett said. Powell, jettisoning the cautious approach he has taken since Trump began attacking him last year for not cutting rates sharply enough, said on Sunday the subpoenas were a pretext to force the Fed to cut its key short-term interest rate. Sen. Kevin Cramer, a Republican from North Dakota, a frequent Powell critic, said Monday that he does not hink that the Fed chair is a criminal and said he hopes that this criminal investigation can be put to rest quickly, according to CNBC. The bipartisan group of former Fed chairs and top economists said in their Monday letter that the White Houses legal actions and the possible loss of Fed independence could hurt the broader economy. This is how monetary policy is made in emerging markets with weak institutions, with highly negative consequences for inflation and the functioning of their economies more broadly, the statement said. It has no place in the United States whose greatest strength is the rule of law, which is at the foundation of our economic success. The statement was signed by former Fed chairs Ben Bernanke, Janet Yellen, and Alan Greenspan, as well as former Treasury Secretaries Henry Paulson and Robert Rubin. Still, Trump’s pressure campaign had been building for some time. The president relentlessly criticized and belittled Powell, attempting to blame him for some of the discontent over the economy that followed the president’s own tariff announcements. Trump appeared to preview the shocking news of the subpoenas at a Dec. 29 news conference. The president 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. Hes just a very incompetent man, Trump said. But were going to probably bring a lawsuit against him. Christopher Rugaber and Josh Boak, Associated Press
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E-Commerce
Indonesia and Malaysia are the first two countries to ban Elon Musk’s artificial intelligence tool Grok, after the generative AI essentially flooded the social media platform X with lewd, sexually explicit images of young girls and women that were made without their consent. Musk folded the generative AI tool into X when he took over Twitter, promising “free speech.” However, critics say it is instead an example of how generative AI, without clear guardrails and regulation, can result in harm. Here’s what to know. What’s happening with Grok? In short, users are typing simple prompts into the AI tool on X to digitally undress girls and women, some of which appear to be minors, triggering the chatbot to remove clothing from the real photos and even placing the subjects in sexually suggestive poses. These deepfake images could violate laws at home and abroad, and have prompted a global public outcry, according to CNN. How have countries besides Indonesia and Malaysia responded? On Monday, the U.K.’s independent online safety watchdog, Ofcom, launched a formal investigation into whether the chatbot’s explicit images violated its rules to protect the country’s citizens from illegal content. Reports of Grok being used to create and share illegal nonconsensual intimate images and child sexual abuse material on X have been deeply concerning,” an Ofcom spokesperson said in a statement. “Platforms must protect people in the U.K. from content thats illegal in the U.K., and we wont hesitate to investigate where we suspect companies are failing in their duties, especially where theres a risk of harm to children. Well progress this investigation as a matter of the highest priority, while ensuring we follow due process.” What has Elon Musk said? Despite calls from the general publicincluding from a recent target of Grok’s misuse, conservative influencer Ashley St. Clair, who is said to have fathered one of Musk’s childrenX has not disabled Grok or stopped it from generating the lewd images. On January 3, Musk responded on X: “Anyone using Grok to make illegal content will suffer the same consequences as if they upload illegal content”in effect, passing the blame onto its own users. This prompted a slew of comments on the post, which has been viewed by some 3.8 million users, including: “please start by addressing the inappropriate images of minors if you truly care,” more calls for Musk to “clean up your site,” as well as AI-generated images of Musk in bikinis. Last week, X said Groks image generation tool would be available only to paying users, according to The New York Times.
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E-Commerce
On Saturday, hours after U.S. forces in Caracas killed at least 80 people and kidnapped Venezuelan President Nicolás Maduro, Donald Trump sounded less like a wartime commander than a developer surveying a newly acquired property. The countrys future, he told reporters at his Mar-a-Lago resort, belonged to very large United States oil companies, which would soon be pumping a tremendous amount of wealth out of the ground. The land in question includes the largest proven oil reserves on Earth at some 300 billion barrels, roughly 17 percent of global totals. But after years of political turmoil and U.S. sanctions, Venezuela accounts for barely 1 percent of global crude production. Its true that they know the oil is there, said Samantha Gross, the director of the Energy Security and Climate Initiative at the Brookings Institution. But the aboveground risks are huge. Chevron is the only major U.S. firm still operating in Venezuela, after other oil giants pulled out in 2007 when former president Hugo Chávez nationalized the industry. By continuing to operate as a minority partner under the state oil companys terms, Chevron preserved its infrastructure, personnel, and legal foothold giving it geopolitical leverage in the ongoing tug-of-war between the United States, China, and the Maduro government. We play a long game, CEO Mike Wirth explained in November at a U.S.-Saudi investment summit in Washington. Today, Chevron is uniquely positioned in the aftermath of the invasion: Its leadership and board have long orbited Republican circles, with deep ties to the Trump administration and a history of big GOP donations. Chevrons in [Venezuela], Trump said on Saturday, but theyre only there because I wanted them to be there. The company did not respond to requests for comment. When Trump returned to office, his administration revoked Biden-era licenses that had allowed the oil major to operate in Venezuela despite the sanctions. Though told to stop producing by April, the company made no attempt to wrap up contracts, pull out personnel, or wind down supply chains. Francisco Monaldi, director of the Latin American energy program at Rice University, said in March that it appeared Chevron is very confident it can obtain an extension. President Donald Trump monitors U.S. military operations in Venezuela from his Mar-a-Lago club in Palm Beach, Florida, on January 3. [Photo: Molly Riley/The White House via Getty Images via Grist] Behind the scenes, executives were busy meeting with Trump and top officials, spending almost $4 million on lobbying in the first half of the year to keep their Venezuelan foothold alive. In March, Wirth joined Trump in the Oval Office, hashing out how to tweak or extend Chevrons license. The president finds Wirths TV appearances entertaining, regularly calling him after cable news appearances. The CEO followed that blitz up with private sit-downs with Secretary of State Marco Rubio, Treasury Secretary Scott Bessent, and staffers from the National Security Council, making the case for his companys continued presence in the country. By July, the gamble had paid off. The administration issued a new license, letting Chevron resume operations in Venezuela. As it did so this fall, the company saw record-breaking production and earned $3.6 billion in its last reported quarter. Though Venezuela accounts for just 100,000 to 150,000 barrels daily a sliver of Chevrons production that oil is heavy, the kind the companys Gulf Coast refineries are designed to process. Having access to Venezuelan crude can help those facilities run more efficiently, increasing supplies and reducing costs. Just before Chevron celebrated its renewed lifeline, it scored another victory: After years of wrangling with the Federal Trade Commission, it finally acquired Hess Corporation, one of the biggest independent oil producers in the United States. Last year, the agency had banned CEO John Hess from joining Chevrons board as part of its anti-trust review, alleging that he had colluded with OPEC representatives to fix oil prices. That victory, however, did not occur in a vacuum. The Hess family is a major donor to the Republican party and contributed more than $1 million to Trumps first inauguration. (Chevron, for its part, donated $2 million to the presidents 2025 ceremony.) Hess whom Trump has called a friend of mine for a long time petitioned the FTC to revisit its decision. The agency later reversed course, unlocking the deal. On July 18, Chevron officially closed its $53 billion merger, and Hess took his seat on the board. President Donald Trump shakes hands with John Hess, CEO of Hess Corp., before signing a series of bills related to Californias vehicle emissions standards on June 12, 2025. [Photo: Chip Somodevilla/Getty Images via Grist] This bought Chevrons entry into what many analysts call the decades most consequential oilfield, in Guyana, Venezuelas neighbor. In 2015, Exxon Mobil announced a huge reserve off the tiny countrys shoreline. That discovery catapulted Guyana a nation of fewer than 1 million people into the petroleum spotlight. Hess 30 percent stake in the project was a key part of Chevrons recent acquisition. Thanks to Trump, one of the largest remaining political obstacles to the Guyana project was just removed. Maduro had challenged Guyanas control over the offshore area. Venezuela has periodically claimed the territory since the 1960s under a long-running border dispute. As production in the region ramped up in 2019 and as Venezuelas own industry faltered, Maduro escalated his attacks, sending naval ships into Guyanese waters and vowing Venezuela would take all necessary actions to stop its development rhetoric remarkably similar to what Trump used to justify his own actions against Maduro this week. But though Trump claims he spoke with oil companies before and after the invasion, taking over the Venezuelan government may have been more than the industry bargained for. There arent oil companies just running to get rid of tens of billions of dollars right now to rebuild the Venezuelan industry, David Mares, the former Institute of the Americas Endowed Chair for Inter-American Affairs at the University of California, San Diego, told Grist. Its not even clear theres a legitimate government in place to make the contracts they sign for legal. Then theres the question of Venezuelas tangled debt. Petróleos de Venezuela, S.A., the state oil company, has racked up more than $150 billion in liabilities over decades of defaults and expropriations. Creditors from energy companies like ConocoPhillips to so-called vulture funds that bought defaulted contracts at deep discounts have pursued arbitration against the country, and won court rulings for damages that remain unpaid. China has been the countrys largest foreign lender, loaning it more than $60 billion over the years. Only some of that has been repaid, mostly in the form of oil exports. As Mares notes, As soon as Venezuelan oil starts to flow, some of those claimants can attach the proceeds, and theyre going to demand their money back. Experts warn that returning to even modest levels of production would require upgrading Venezuelas aging infrastructure, a process that would require massive investment and political stability conditions that have eluded Caracas for years and seem unlikely to materialize anytime soon. There is no realistic prospect of immediately increasing Venezuelas crude output, Gus Vasquez, the head of oil pricing in the Americas for commodity markets analyst Argus Media, wrote in an emailed statement. Venezuelan oil infrastructure would take years and possibly hundreds of billions to bring up to something cloe to its former capacity. Repairing refineries would be even harder. Chevrons existing assets give the company a very different calculus than newcomers would face. But the timing could not be worse: Global crude oil prices have steadily declined over the last several years, recently dropping below $60 a barrel approaching the break-even point for many American operators. Thats been driven by global supply surpluses and by weakening demand, as renewable energy prices drop. I think what were seeing is that the days of the oil and gas industry being the growth engine of economies is well behind us, said Trey Cowan, an oil and gas energy analyst at the Institute for Energy Economics and Financial Analysis. Despite these structural shifts, Gross notes, Trump has a very old-school way of thinking about resource economics, as a blunt lever of power. As companies like Chevron have found, aligning with his priorities can bring financial and regulatory advantages, even if they are not supported by broader market conditions. This week, the companys stock jumped 6 percent. On TruthSocial on Tuesday, Trump announced that Caracas would be turning over between 30 and 50 million barrels of sanctioned oil that will then be sold. [T]hat money will be controlled by me, he wrote. Trump hopes to lower oil prices to $50 a barrel, which would squeeze shale producers and destabilize the U.S. oil industry. On Wednesday, the Department of Energy issued a brief announcement elaborating, as Chevron entered talks with the administration to increase its operations and resell oil to other refiners. The statement declares the U.S. will sell the sovereign nations crude on the global marketplace and describes the proceeds as going to U.S.-controlled accounts at globally recognized banks, an unusual setup that bypasses the U.S. Treasury. The money is vaguely promised to serve both Americans and Venezuelans, and the arrangement will be indefinite. Youre going to see, probably, a growth in Chevron activities there quickly, Secretary of Energy Chris Wright said on Thursday. Senate Democrats have launched an investigation into the Trump administrations communications with oil companies, which they claim occurred 10 days before the invasion, while Congress was not briefed. The suggestion that taxpayers could pay the cost of rebuilding Venezuelas oil infrastructure raise serious concerns about how the Trump administration engaged with the oil companies prior to his decision to use military force, they wrote. Gross says to the extent Trump can be described as a populist, it is largely a performance one he might play on TV but she added that typically, When you see populist governments take over oil industries, it doesnt usually turn out well. In all the turmoil, what no one appears to be asking is what is good for Venezuela. The saddest part of this is that unwinding the Maduro regime does not seem to be a part of what Trump policy is aiming for, said Cynthia Arson, former director of the Woodrow Wilson International Centers Latin American Program. In its statements after the strike, the White House has largely overlooked questions about a democratic transition, sidelining concerns about human rights abuses and the treatment of political prisoners. Even when oil starts flowing, a new Venezuelan government will likely struggle to meet public expectations while attracting foreign investment. Before Chávez, the countrys oil contracts typically gave the government around 50 percent of revenue, helping fund social programs and the middle class. U.S. oil majors, by contrast, often offer royalties around 12 percent. The contrast highlights just how fragile and uncertain the path ahead is: Years of economic collapse, which have driven millions abroad, have left those remaining struggling with profound political and social upheaval that cant be solved by oil alone. If good things happen, theyre going to take time, Gross said. Bad things could actually happen pretty quickly. This article originally appeared in Grist. Grist is a nonprofit, independent media organization dedicated to telling stories of climate solutions and a just future. Learn more at Grist.org
Category:
E-Commerce
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