Federal Reserve Chair Jerome Powell confirmed on Sunday that the U.S. Department of Justice has opened a criminal investigation related to his June 2025 testimony before the Senate Banking Committee, serving grand jury subpoenas to the central bank. The probe marks a sharp escalation in tensions between the executive branch and the Fed.
Renovation costs under scrutiny
The investigation centers on whether Powell misled Congress about the $2.5 billion renovation of the Fed's headquarters and surrounding buildings in Washington, D.C. The inquiry originated from a referral by Republican Rep. Anna Paulina Luna, who accused Powell of making false statements. The U.S. Attorney's Office for the District of Columbia approved the investigation in November.
Powell pushed back, arguing that Congress was kept informed through testimony and public disclosures. He framed the probe as a pretext for retaliation over monetary policy decisions that contradicted President Donald Trump's demands for faster rate cuts. "This is about whether the Fed will continue to set interest rates based on evidence and economic conditions," Powell said, "or whether monetary policy will be directed by political pressure."
Trump has repeatedly criticized Powell over rates and publicly questioned the renovation's scale. Allies of the president spent much of last year attacking the Fed's handling of the upgrades, with Trump at times suggesting legal action.
Bipartisan backlash over independence
Attorney General Pam Bondi said the probe focuses on accountability and taxpayer funds. Trump denied directing the investigation but again called Powell ineffective. The move drew warnings from both parties. Republican Senator Thom Tillis said the investigation risks undermining the Fed's independence and vowed to oppose future Fed nominees until the matter is resolved.
Powell, who has served under four administrations, said he intends to stay and carry out the Fed's dual mandate of price stability and maximum employment. "Public service sometimes requires standing firm," he added, emphasizing that the central bank must remain insulated from political intimidation. The Trump administration has already moved to reshape the Fed's leadership, installing a close ally on the board and attempting to remove Governor Lisa Cook over unproven allegations.