DOJ Opens Criminal Probe Into Fed Chair Jerome Powell
The U.S. attorney’s office in the District of Columbia has launched a criminal investigation into Federal Reserve Chair Jerome Powell, focused on whether he misled Congress regarding the $2.5 billion renovation of the Fed’s headquarters in Washington, DC. Powell responded that the investigation is an attempt by President Trump to influence the Fed to lower interest rates ahead of the midterm elections.
Powell speaks out: In a rare online video statement Sunday, Powell warned that the Justice Department’s probe threatens the Federal Reserve’s independence and suggested it is tied to Trump’s pressure campaign for interest rate cuts. Powell’s term as Fed chair ends in about four months.
It is the first time in history the DOJ is investigating a Fed chair. It was approved by U.S. Attorney Jeanine Pirro, a close ally of President Trump.
On Monday, lawmakers from both parties and several former Fed chairs publicly pushed back against the investigation.
The president told NBC News Sunday he didn’t “know anything about” the probe and rejected claims that the investigation is tied to his long-running feud with “Too Late Powell.” That’s despite Trump saying in December that “we’re thinking about bringing a suit against Powell for incompetence” related to the high cost of construction on Fed HQ.
HOW WE GOT HERE
Back in July, Trump and Powell toured the renovation site of the updated Fed building, which is set to be completed in 2027. Trump and Powell bickered in front of the press over exactly how much money the renovation project would cost. Now it’s looking like it might cost $2.5 billion in total – exceeding the $1.9 billion budget first set. Note: The Fed renovations are paid for internally by the bank, which is not funded by Congress. Taxpayers are not on the hook.
Trump appointed Powell, a lawyer by training, to the Fed chair position during the president’s first term in 2017. Lately, Trump has become exceedingly critical of the Fed chair for not cutting interest rates fast enough.
Since returning to office, Trump has repeatedly challenged the Fed’s independence — from attempting to remove Fed Governor Lisa Cook, a Biden appointee, to openly musing about firing Powell. The Supreme Court will weigh the legality of Cook’s attempted ouster next week.
PUSHBACK ON THE PROBE
Former Fed chairs, top economists, and ex–Treasury secretaries rallied behind Powell Monday in a statement. They cautioned that politicizing monetary policy could undermine economic stability. The probe also sparked concerns on Capitol Hill, even among Republicans.
Sen. Thom Tillis (R-NC), who is not seeking reelection and sits on the Banking Committee, said, “If there were any remaining doubt whether advisers within the Trump Administration are actively pushing to end the independence of the Federal Reserve, there should now be none.”
He vowed to block any future Fed confirmations, including the upcoming chair vacancy, “until this legal matter is fully resolved.”
How? He would create a 12-12 deadlock on the committee if he sides with Democrats.
Rep. French Hill (R-AR), chair of the House Financial Services Committee, called a criminal probe into Powell “an unnecessary distraction.”
Sen. Kevin Cramer (R-ND), one of Powell’s harshest critics, said he believes Powell has been a “bad Fed Chair,” but that he is not “a criminal.”
Democrats remain largely unified in condemning what they say is presidential overreach.