Federal prosecutors opened a criminal investigation after grand jury subpoenas were issued Friday into Federal Reserve Chair Jerome Powell, focusing on his June 2025 Senate testimony about the Fed’s $2.5 billion headquarters renovation, and Powell confirmed the probe in a video statement on Sunday. The inquiry centers on whether Powell accurately described the renovation’s scope and costs during his congressional appearances.
Powell framed the probe as political pressure on central bank decisions and warned about threats to monetary independence. “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.”
The investigation began after Rep. Anna Paulina Luna referred Powell to the Department of Justice, which is reviewing his testimony and related documents. Powell has called the renovation concerns “pretexts” for efforts to weaken Fed independence.
Markets and lawmakers reacted quickly, citing risks to U.S. dollar stability and policy credibility (Ed. note: Investors see potential long-term implications for central bank independence). “We are stunned by this deeply disturbing development which came out of the blue after a period in which tensions between Trump and the Fed seemed to be contained,” said Krishna Guha, and Senate Democrat Chuck Schumer called the action political bullying.
President Trump denied involvement and criticized Powell’s performance. “I don’t know anything about it, but he’s certainly not very good at the Fed, and he’s not very good at building buildings.” A spokesperson for Attorney General Pam Bondi said, “The Attorney General has instructed her U.S. Attorneys to prioritize investigating any abuse of tax payer dollars.” The White House plans to name a successor to Powell by May, with Kevin Hassett among potential candidates.
