Federal prosecutors have opened a criminal investigation into Federal Reserve Chair Jerome H. Powell, marking a dramatic escalation in the long-running dispute between the central bank and the White House. The investigation focuses on the Federal Reserve’s ongoing $2.5 billion renovation of its Washington, D.C., headquarters, according to officials briefed on the matter.
Justice Department Confirms Launch of Probe
The U.S. Attorney’s Office for the District of Columbia is examining whether public comments made by Powell were misleading and whether spending on the multiyear renovation was improperly managed. The Federal Reserve acknowledged receiving federal subpoenas tied to the matter late Sunday. While the Justice Department declined to confirm specific investigative steps, a spokesperson noted that the department intends to “prioritize investigating any abuse of taxpayer dollars.”
Review of Congressional Testimony and Project Oversight
Central to the inquiry is Powell’s testimony before Congress last summer, during which he described the renovation as a multi-agency collaboration and emphasized that costs had fluctuated due to building age, asbestos removal, and infrastructure upgrades. Allies of President Donald Trump have publicly accused the project of waste and mismanagement. The Federal Reserve has defended the renovation as necessary to modernize ventilation, electrical systems, and safety features in buildings constructed decades ago.
Approval and Political Backdrop
The investigation was formally approved in November 2025 by U.S. Attorney Jeanine Pirro, a close Trump ally appointed to the post last year. The probe arrives amid an intensifying power struggle over central bank independence. For years, President Trump has criticized Powell for rejecting calls to slash interest rates more aggressively. Trump has previously floated firing Powell, threatened legal action over the renovation, and recently stated he plans to name a replacement soon, with economic adviser Kevin Hassett widely viewed as a frontrunner. Powell’s term as chair ends in May 2026, although his term as governor extends into 2028.
Powell Responds, Citing Threats to Fed Independence
Powell addressed the investigation in an unusual video message released Sunday night. Calling the criminal probe “unprecedented” and a “pretext,” he argued that the inquiry stemmed from policy disagreements with the White House rather than genuine legal concerns. “The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on economic conditions rather than presidential preference,” Powell said, warning that the case represents a broader challenge to the central bank’s autonomy. He insisted he has carried out his duties “without political fear or favor.”
Sustained Pressure Campaign From the Administration
The criminal inquiry represents the most serious step in an ongoing campaign by the administration to pressure the Federal Reserve. Trump has repeatedly attacked Powell for declining to cut interest rates further, even after the Fed implemented three reductions late last year. Fed officials have recently signaled rate cuts are unlikely in the near term. The administration has also launched political efforts targeting other members of the Board of Governors, including attempts to remove Governor Lisa Cook, whose future on the board is now before the Supreme Court. Oral arguments are scheduled later this month on whether Trump has the authority to dismiss her.
Federal Reserve Acknowledges Legal Process Underway
A spokesperson for the Federal Reserve confirmed that grand jury subpoenas related to Powell’s testimony and renovation oversight have been received, formally initiating the Justice Department’s legal process. Further developments are expected as the investigation proceeds.
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