Criminal investigation into Jerome Powell signals escalating clash over Federal Reserve independence

Federal Reserve Chair Jerome H. Powell is under criminal investigation by the U.S. attorney’s office in the District of Columbia, over whether he misled Congress about the scope and spending of a US$2.5 billion renovation project for the central bank’s headquarters.

The inquiry, approved in November by U.S. Attorney Jeanine Pirro—a known ally of former President Donald Trump—focuses on Powell’s statements to Congress and a detailed review of the Federal Reserve’s construction spending, according to officials briefed on the matter.

Powell, in a rare video statement released on 11 January, described the Justice Department’s move as “unprecedented” and suggested the investigation was not genuinely about oversight but a result of the Fed’s resistance to political interference in monetary policy.

“This new threat is not about my testimony last June or about the renovation,” Powell stated. “It 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.”

He warned that the probe could jeopardise the Fed’s legally protected independence, asserting, “This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions—or whether instead monetary policy will be directed by political pressure or intimidation.”

The Marriner S. Eccles Building and a second facility on Constitution Avenue, both dating back to the 1930s, have been undergoing comprehensive modernisation since 2022, with completion expected in 2027. The project has reportedly run US$700 million over budget.

The Fed claims the renovation is necessary due to the presence of asbestos, soil contamination, and the need for accessibility improvements. However, earlier plans included controversial features such as private elevators, new marble installations, and a rooftop terrace, some of which Powell has since denied remain in the final design.

At a congressional hearing in June 2025, Powell stated, “There’s no V.I.P. dining room; there’s no new marble. We took down the old marble, we’re putting it back up.” He also clarified that project elements had evolved and unnecessary features had been removed.

Following the testimony, the Federal Reserve released a detailed FAQ to reaffirm Powell’s statements and justify cost overruns as the result of labour, materials, and unexpected environmental hazards.

Despite Powell’s clarifications, prosecutors under Pirro’s office have repeatedly requested documents related to the renovation. A Fed official, speaking on condition of anonymity, confirmed ongoing contact from the investigators.

Attorney General Pam Bondi has not commented on the specifics but noted she has directed prosecutors to investigate all potential abuses of taxpayer funds.

The political context surrounding the investigation is significant. Former President Trump, who originally nominated Powell in 2017, has repeatedly criticised him for refusing to lower interest rates aggressively. In a recent interview with The New York Times, Trump revealed he had selected a potential replacement for Powell once his term as chair expires in May 2026.

Kevin A. Hassett, Trump’s former top economic adviser, is reportedly a leading contender. While Powell’s chair term ends in May, his broader term as a Federal Reserve governor continues until January 2028.

Trump denied having knowledge of the investigation when questioned by NBC News but maintained his criticism of Powell’s economic management. “He’s certainly not very good at the Fed, and he’s not very good at building buildings,” he said.

He also emphasised that the inquiry was unrelated to monetary policy, stating, “What should pressure him is the fact that rates are far too high. That’s the only pressure he’s got.”

Lawmakers from both parties have voiced concern over the investigation’s timing and implications. Senator Thom Tillis, a Republican and member of the Senate Banking Committee, pledged to oppose any Federal Reserve nominee, citing the investigation’s potential to undermine central bank independence.

“There should now be no doubt that advisers within the Trump administration are actively pushing to end the independence of the Federal Reserve,” Tillis stated.

Democratic Senator Elizabeth Warren expressed even stronger condemnation. “As Donald Trump prepares to nominate a new Fed chair, he wants to push Jerome Powell off the Fed Board for good and install another sock puppet to complete his corrupt takeover of America’s central bank,” she said.

Senator Bernie Sanders criticised the investigation into Jerome Powell as politically motivated, warning it signals an erosion of democratic norms. “Donald Trump is not prosecuting Powell because the Fed Chair broke the law,” Sanders said.

“He is prosecuting him because he won’t bend the knee.” Sanders, who opposed Powell’s nomination on policy grounds, emphasised that such disagreements are part of democratic discourse—not grounds for criminal charges.

He further argued that Trump’s actions reflect a broader pattern of using state power to target critics.

Citing prior efforts to investigate or discredit public figures like Senator Mark Kelly, Attorney General Letitia James, and former FBI Director James Comey, Sanders stated, “Trump doesn’t disagree with his opponents—he seeks to intimidate and destroy them.” He called for unity across political lines to reject authoritarianism and protect democratic institutions.

The situation forms part of a broader campaign against Powell and other central bank officials. Trump has also sought the removal of Fed Governor Lisa D. Cook, alleging financial misconduct. That effort is scheduled for review by the U.S. Supreme Court on 21 January.

Meanwhile, recent attempts by the Department of Justice to indict other officials critical of Trump—including former FBI Director James Comey and New York Attorney General Letitia James—have failed in court. An inquiry into Senator Adam Schiff remains open but has not progressed to a grand jury.

As scrutiny intensifies around the central bank and its leadership, Powell maintains that the Federal Reserve must remain shielded from partisan influence. “Public service sometimes requires standing firm in the face of threats,” he concluded.