Criminal investigations are underway by federal prosecutors regarding Federal Reserve Chairman Jerome Powell, concentrating on the $2.5 billion refurbishment of the central bank’s headquarters in Washington, D.C., along with his testimonies to Congress, Powell disclosed on Sunday evening.
According to Powell, the investigation stems from President Donald Trump‘s ongoing dissatisfaction with the Fed for not reducing interest rates as promptly and as substantially as he has urged.
“The looming threat of criminal charges results from the Federal Reserve establishing interest rates based on our best judgment of serving the public, rather than capitulating to the President’s demands,” Powell stated in a video message shared via the Fed’s X account.
The chairman cautioned that the investigation’s findings will influence the future decisions of the central bank.
“This pertains to whether the Fed can continue to determine interest rates based on factual evidence and economic realities — or if monetary policy will instead be subject to political coercion or threats,” Powell asserted.
Stock futures dropped following Powell’s remarks.
On Friday, Powell revealed that the Department of Justice issued the Fed “grand jury subpoenas indicating potential criminal charges concerning my testimony before the Senate Banking Committee last June.”
“That testimony was partly about a long-term initiative to upgrade historical Federal Reserve office structures,” he remarked.
Powell indicated that the threat of indictment “is not specifically about my June testimony or the refurbishment of the Federal Reserve buildings.”
“This situation is not about Congress’s role in oversight; the Fed has diligently sought to keep Congress appraised of the renovation project through testimonies and other disclosures,” he stated. “Those are mere excuses.”
“I hold a profound respect for the rule of law and for accountability within our democracy,” stated Powell in his address.
“No individual, least of all the chair of the Federal Reserve, is exempt from the law, yet this unprecedented move should be viewed in light of the administration’s ongoing threats and pressures.”
“Throughout my service at the Federal Reserve under four different administrations, both Republican and Democrat,” Powell noted.
“In every instance, I have executed my responsibilities without political bias, devoted to our mission of price stability and maximum job creation,” he remarked. “Public service occasionally demands standing resolute amid threats. I will persist in fulfilling the responsibilities for which the Senate confirmed me, with integrity and a dedication to serving the American populace.”
A Department of Justice spokesperson, addressing CNBC, made a statement without directly linking it to Powell, saying, “The Attorney General has instructed her U.S. Attorneys to prioritize scrutinizing any misuse of taxpayer resources.”
The New York Times first disclosed the investigation, citing sources briefed on the situation.
A source familiar with the probe expressed to CNBC that they would not contest the assertion that Powell’s investigation is connected to the building renovation and his testimony to Congress.
The inquiry is managed by the U.S. Attorney’s Office for the District of Columbia, as per the newspaper.
This office is under U.S. Attorney Jeanine Pirro, a former New York state prosecutor and Fox News host, who was appointed by Trump.
In an interview with NBC News on Sunday evening, Trump remarked, “I am not informed about it,” alluding to the criminal investigation of Powell.
“But he is not very competent at the Fed, or in managing buildings,” Trump commented to the news outlet.
Trump has consistently criticized Powell for the Fed’s failure to reduce interest rates as significantly and swiftly as he has requested since taking office in January 2025.
However, the president noted to NBC on Sunday that the DOJ’s subpoenas do not pertain to interest rates, as reported.
“No. I wouldn’t even consider it that way,” Trump stated. “What should concern him is the high interest rates. That’s the sole pressure he faces.”
On December 29, Trump claimed, “We are contemplating filing a lawsuit against Powell for incompetence” relating to the refurbishment of the Fed’s buildings.
“This is going to end up costing over $4 billion,” Trump mentioned. “It’s the highest construction cost per square foot in history.” He also expressed that “I would be very happy to dismiss him.”
The investigation surfaced approximately six months after Rep. Anna Paulina Luna, R-Fla., initially stated she had referred Powell to the DOJ for possible perjury and false statements regarding his testimony on the renovation of the Fed’s headquarters.
“I detailed how Jerome Powell lied under oath to Congress and distorted facts in official communications with senior administration officials, including OMB Director Russell Vought,” Luna remarked in a tweet on Sunday. “Unelected bureaucrats must not have a free pass. This is the exact reason oversight is crucial, and I am grateful that the @DOJ is treating this matter seriously. No one is above the law.”
Trump has openly indicated his desire to oust Powell as chair when his term concludes in May.
The leading candidates to succeed him are thought to be former Fed Governor Kevin Warsh and Kevin Hassett, the current head of the National Economic Council.
Sen. Thom Tillis, a Republican from North Carolina and a member of the Senate Banking Committee, condemned the inquiry into Powell and declared he would oppose the nomination of any replacement by Trump, as well as any other Fed Board nominee, “until this legal issue is completely resolved.”
“If there was any lingering doubt about whether advisors within the Trump Administration are actively attempting to undermine the independence of the Federal Reserve, it should now be eliminated,” Tillis expressed in a statement.
“Now, the independence and integrity of the Department of Justice are also at stake,” the senator added.
Senate Minority Leader Chuck Schumer, a Democrat from New York, asserted that Trump’s “assault on the Fed’s independence persists,” warning that the president is jeopardizing the stability and strength of the U.S. economy.
“This constitutes the type of bullying we’ve all come to associate with Donald Trump and his cronies. Anyone who remains independent and doesn’t simply conform to Trump’s demands gets investigated,” stated Schumer. “Jay Powell and the Fed are not the cause of Trump’s economic downturn and plummeting poll numbers. If he’s looking for who is responsible, he should scrutinize himself.”
Sen. Elizabeth Warren from Massachusetts, the senior Democrat on the Banking Committee, reiterated Tillis’s stance.
“As Donald Trump is preparing to propose a new Fed Chair, he aims to permanently oust Jerome Powell and place another puppet to finalize his corrupt takeover of America’s central bank,” Warren declared in a statement.
“Trump is misusing the powers of the Department of Justice in a manner reminiscent of a dictator so that the Fed aligns with his interests, as well as those of his billionaire associates,” Warren stated.
“This Committee and the Senate must not advance any nominees from Trump for the Fed, including the Fed Chair position.”
Brian Jacobsen, chief economic strategist at Annex Wealth Management, remarked in a note to clients on Sunday, “President Trump is pursuing criminal charges against Powell concerning his testimony in Congress regarding the Fed’s headquarters renovation.”
“Powell might demonstrate his defiance through a sit-in. His tenure as Chair concludes in May, but his term as a governor lasts until January 2028,” Jacobsen noted.
“In light of the political pressures on the Fed, he might opt to serve as a governor out of defiance, preventing President Trump from replacing him with another appointee,” Jacobsen suggested. “Stephen Miran‘s term is expiring in January 2026 and could represent Trump’s only opportunity for an appointment. Although it would be unusual for Powell to remain, these times are uniquely extraordinary.”
Trump selected Powell for the Fed chair role in 2017; he was affirmed in 2018.
However, right from the start of Powell’s term, Trump has persistently pressured the Fed chair regarding interest rates.
At different times, Trump has labeled Fed officials “boneheads” and has previously described Powell as a golfer lacking putting skills.
Those criticisms escalated during Trump’s second term, as the president urged the central bank for substantial rate cuts for several months, even subsequent to three consecutive quarter-point reductions that began in September.
During that period, Trump appointed his chosen candidate, Miran, as a Fed governor and has attempted to remove another governor, Lisa Cook, from the board amid allegations of mortgage fraud.
Cook has denied those allegations, made in the form of criminal referrals to the DOJ by Federal Housing Finance Agency Director Bill Pulte, who has relentlessly targeted perceived adversaries of Trump, appointed by him to the position.
The Supreme Court is poised to hear arguments concerning a case challenging Cook’s dismissal later this January.
Krishna Guha, vice chairman of Evercore ISI and leader of its Global Policy and Central Bank Strategy Team, expressed in a note regarding Powell’s investigation, “We are shocked by this deeply concerning occurrence that seemingly emerged from nowhere after a phase in which tensions between Trump and the Fed appeared to be subdued.”
“We anticipate declines in the dollar, bonds, and stocks during Monday’s trading, reflecting a sell-off of U.S. assets akin to what occurred last April during the peak of the tariff crisis and previous threats to Powell’s Fed chair position, with global investors demanding a higher risk premium for U.S. assets,” Guha stated. “Gold and other secure investments are likely to see a rise.”
— Contributions to this article were made by CNBC’s Jeff Cox, Eamon Javers, and Garrett Downs
