lawsuits

Treasury Secretary Scott Bessent has faced questions from the United States Senate about President Donald Trump’s ongoing campaign to slash interest rates, despite concerns that such a move could turbo-charge inflation.

Bessent appeared on Thursday before the Senate’s Financial Stability Oversight Council.

There, he received a grilling from Democrats over rising consumer prices and concerns about Trump’s attempts to influence the Federal Reserve, the US central bank.

One of his early clashes came with Senator Elizabeth Warren, who sought answers about a report in The Wall Street Journal that indicated Trump joked about suing his nominee for the Federal Reserve chair, Kevin Warsh, if he failed to comply with presidential demands.

“Mr Secretary, can you commit right here and now that Trump’s Fed nominee Kevin Warsh will not be sued, will not be investigated by the Department of Justice, if he doesn’t cut interest rates exactly the way that Donald Trump wants?” Warren asked.

Bessent evaded making such a commitment. “That is up to the president,” he replied.

Pressure on Federal Reserve members

Last week, Trump announced Warsh would be his pick to replace the current Federal Reserve chair, Jerome Powell, who has faced bitter criticism over his decision to lower interest rates gradually.

By contrast, Trump has repeatedly demanded that interest rates be chopped as low as possible, as soon as possible.

In December, for instance, he told The Wall Street Journal that he would like to see interest rates at “one percent and maybe lower than that”.

“We should have the lowest rate in the world,” he told the newspaper. Currently, the federal interest rate sits around 3.6 percent.

Experts say a sudden drop in that percentage could trigger a short-term market surge, as loans become cheaper and money floods the economy. But that excess cash could drive down the value of the dollar, leading to higher prices in the long term.

Traditionally, the Federal Reserve has served as an independent government agency, on the premise that monetary decisions for the country should be made without political interference or favour.

But Trump, a Republican, has sought to bring the Federal Reserve under his control, and his critics have accused him of using the threat of legal action to pressure Federal Reserve members to comply with his demands.

In August, for instance, he attempted to fire Federal Reserve Governor Lisa Cook based on allegations of mortgage fraud, which she has denied.

Cook had been appointed to the central bank by Trump’s predecessor and rival, Democrat Joe Biden, and she has accused Trump of seeking her dismissal on political grounds. The Supreme Court is currently hearing the case.

Then, in early January, the Department of Justice opened a criminal investigation into Powell, echoing accusations Trump made, alleging that Powell had mismanaged renovations to the Federal Reserve building.

Powell issued a rare statement in response, accusing Trump of seeking to bully Federal Reserve leaders into compliance with his interest rate policy.

“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President,” Powell wrote.

Bipartisan scrutiny of Powell probe

Given the string of aggressive actions against Powell and Cook, Trump’s joke about suing Warsh fuelled rumours that the Federal Reserve’s independence could be in peril.

Within hours of making the joke on January 31, Trump himself faced questions about how serious he might have been.

“It’s a roast. It’s a comedy thing,” Trump said of his remarks as he spoke to reporters on Air Force One. “It was all comedy.”

Warren, however, pressed Bessent about Trump’s remarks and chided the Treasury chief for not rejecting them.

“I don’t think the American people are laughing,” Warren told Bessent. “They’re the ones who were struggling with the affordability.”

The prospect of Trump exerting undue influence over the Federal Reserve even earned a measure of bipartisan criticism during Thursday’s council meeting.

Senator Thom Tillis, a Republican from North Carolina, opened his remarks to Bessent with a statement denouncing the probe into Powell, even though he acknowledged he was “disappointed” with the current Fed chair.

Still, Tillis emphasised his belief that Powell committed no crime, and that the investigation would discourage transparency at future Senate hearings.

He imagined future government hearings becoming impeded by legal formalities, for fear of undue prosecution.

“They’re going to be flanked with attorneys, and anytime that they think that they’re in the middle of a perjury trap, they’re probably just going to say, ‘I’ll submit it to the record after consultation with my attorneys,’” Tillis said, sketching out the scenario.

“Is that really the way we want oversight to go in the future?”

For his part, Bessent indicated that he backed the Federal Reserve’s long-term goal to keep interest rates at about 2 percent.

“It is undesirable to completely eliminate inflation,” Bessent said. “What is desirable is to get back to the Fed’s 2 percent target, and for the past three months, we’ve been at 2.1 percent.”

Scrutinising the lawsuit against the IRS

As Thursday’s hearing continued, Bessent was forced to defend the Trump administration on several fronts, ranging from its sweeping tariff policy to its struggle to lower consumer prices.

But another element of Trump’s agenda took centre stage when Democrat Ruben Gallego of Arizona had his turn at the microphone.

Gallego sought to shine a light on the revelation in January that Trump had filed a lawsuit against the Internal Revenue Service (IRS) — part of his own executive branch.

Trump is seeking $10bn in damages for the leak of his tax returns during his first term as president. The IRS itself was not the source of the leak, but rather a former government contractor named Charles Littlejohn, who was sentenced to five years in prison.

Bessent was not named as a defendant in the lawsuit, though he currently serves both as the Treasury secretary and the acting commissioner of the Internal Revenue Service.

Critics have argued that Trump’s lawsuit amounts to self-dealing: He holds significant sway over the Justice Department, which would defend the federal government against such lawsuits, and he could therefore green-light his own settlement package.

In Thursday’s exchange with Gallego, Bessent acknowledged that any damages paid to Trump would come from taxpayer funds.

“ Where would that $10bn come from?” Gallego asked.

“ It would come from Treasury,” Bessent replied. He then underscored that Trump has indicated any money would go to charity and that the Treasury itself would not make the decision to award damages.

Still, Gallego pressed Bessent, pointing out that the Treasury would ultimately have to disburse the funds — and that Bessent would be in charge of that decision.

That circumstance, Gallego argued, creates a conflict of interest, since Bessent is Trump’s political appointee and can be fired by the president.

“Have you recused yourself from any decisions about paying the president on these claims?” Gallego asked.

Bessent sidestepped the question, answering instead, “I will follow the law.”

SACRAMENTO — Amid a national uproar over the recent killing of a Minnesota man by immigration agents, the California Senate on Tuesday approved proposed legislation that would make it easier to sue law enforcement officials suspected of violating an individual’s constitutional rights.

Senate Bill 747 by Sen. Scott Wiener (D-San Francisco) creates a pathway for residents to take legal action against federal agents for the excessive use of force, unlawful home searches, interfering with a right to protest and other violations.

The bill, which cleared a Senate committee earlier this year, passed 30-10, along Democrat and Republican party lines.

Other states, including New York and Connecticut, are weighing similar legislation following widespread anger over the actions during the Trump administration’s immigration crackdowns and raids.

Existing laws already allow lawsuits against state and local law enforcement officials. But it is much harder to bring claims against a federal officers. Wiener said his bill would rectify those impediments.

Several state law enforcement agencies oppose the legislation, arguing it will also be used to sue local officers.

Tuesday’s vote follows the killing of 37-year-old Alex Pretti in Minneapolis on Saturday by federal officials, who tackled him to the ground, appeared to remove his holstered handgun and then shot Pretti several times in the back. During the debate on the state Senate floor Tuesday, several Democratic lawmakers called Pretti’s death an execution or murder.

Renee Good, a 37-year old mother of three, was also shot and killed by agents earlier this month in Minnesota in what federal officials have alleged was an act of self defense when she drove her vehicle toward an officer — an assertion under dispute.

The deaths, as well as the government’s insistence that immigration agents don’t require judicial warrants to enter homes, have outraged Democrats leaders, who accuse federal officers of flouting laws as they seek to deport thousands of undocumented immigrants.

Wiener, speaking to reporters before Tuesday’s vote, said that his legislation would reform the law to ensure that federal officials are held accountable for wrongdoing.

“Under current law, if a local or state officer shoots your mom…or publicly executes an ICU nurse, you can sue,” said Wiener. “That’s longstanding civil rights law, but in the current law, it’s almost impossible to file that same lawsuit against the federal agent who does the exact same thing.”

During Tuesday’s debate on the senate floor, Sen. Tony Strickland (R-Huntington Beach) acknowledged the “chaos” in Minnesota, but criticized the bill as being about immigration politics. He urged his colleagues to focus on the state’s affordability crisis, rather than challenges to the federal government.

“We need to start focusing on California-specific issues like gas, gas prices,” said Strickland.

Strickland’s comments drew a rebuke from Sen. Susan Rubio, (D-West Covina) who said the bill wasn’t about immigration, but “about the egregious violation of people’s rights. and the murders that we are witnessing.”

“This is about equal justice under the law,” said Rubio, a one-time undocumented citizen.

Wiener’s bill now heads to the state Assembly. The senator, who is running to fill the seat by outgoing Rep. Nancy Pelosi, told reporters that he didn’t know if Gov. Gavin Newsom supports his legislation or if he would sign it into law if it passes the full Legislature.

Wiener’s proposed law was put forth after George Retes Jr, a California security guard was detained following a July raid in Camarillo. Retes, a U.S. citizen and Army veteran, said he was held for three days without the ability to make a phone call or see an attorney.

Retes has accused Department of Homeland Security spokesperson Tricia McLaughlin of spreading false information about him to justify his detention. The Homeland Security department said in a statement last year that Retes impeded its operation, which he denies.

Under U.S. Code Section 1983, a person can sue state and local officials who violate their constitutional rights. A state law also allows lawsuits against state and local officials for interfering with a person’s constitutional rights by force or threat.

When it comes to filing legal action against federal officials, lawsuits can be brought through the Bivens doctrine, which refers to the 1971 Supreme Court ruling in Bivens vs. Six Unknown Federal Agents that established that federal officials can be sued for monetary damages for constitutional violations.

But in recent decades, the Supreme Court has repeatedly restricted the ability to sue under Bivens. Some Supreme Court justices have also argued that it’s up to Congress to pass a statute that would allow federal officers to be sued when they violate the Constitution.

Those opposed to Wiener’s law include the Peace Officers Research Assn. of California, which represents more than 85,000 public safety members. The group argues it would result in more lawsuits against local and state officials, essentially creating multiple paths for litigation.