The Justice Department has launched a criminal investigation into Federal Reserve Chair Jerome Powell, issuing subpoenas over his congressional testimony about the central bank’s headquarters renovation, Powell disclosed on Sunday.
The probe marks an unprecedented escalation in President Donald Trump’s year-long confrontation with the Fed chief over interest rate policy.
Powell released a video statement Sunday evening saying the Justice Department served the Federal Reserve with grand jury subpoenas on Friday.
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“On Friday, the Department of Justice served the Federal Reserve with grand jury subpoenas, threatening a criminal indictment related to my testimony before the Senate Banking Committee last June,” Powell said.
He said prosecutors focus on his June testimony to the Senate Banking Committee regarding the Fed’s $2.5 billion building renovation project.
“This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings,” Powell said. “It is not about Congress’s oversight role; the Fed, through testimony and other public disclosures, made every effort to keep Congress informed about the renovation project. Those are pretexts.”
Powell characterized the investigation as an attack on Fed 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.”
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“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,” he added.
Trump has repeatedly criticized Powell throughout 2025 for maintaining the Fed’s benchmark rate at 4.25% to 4.50%. The president wants aggressive rate cuts to boost economic growth, while Powell has resisted, citing concerns about inflation and the economic impact of Trump’s tariff policies.
The building renovation became a flashpoint in July when Trump made a rare presidential visit to the Fed headquarters. During a televised tour, Trump claimed costs had reached $3.1 billion. Powell immediately corrected him, explaining that Trump had included a third building completed in 2021.
“You just added in a third building,” Powell told Trump during the awkward exchange. “It was built five years ago.”
Trump’s criticism of the Fed renovation came as he advanced his own construction of a White House ballroom featuring gold chandeliers, gilded Corinthian columns, and marble floors. The project’s cost has escalated from an initial $200 million estimate to $400 million, according to Trump’s statements in December. The ballroom demolition began in October without required approvals from the National Capital Planning Commission.
Trump told NBC on Sunday that the investigation has nothing to do with interest rates. However, he added that “rates are far too high” and suggested Powell faces pressure to lower them.
Sen. Thom Tillis, R-N.C., who serves on the Banking Committee, said he will oppose any Trump nominee to replace Powell or any Fed board nominee “until this legal matter is fully resolved.”
“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,” Tillis said.
Powell’s term as Fed chair expires in May 2026. Trump nominated Powell to the position in 2017 but has since nicknamed him “Too Late” and threatened to fire him, though legal experts say such a move would face immediate court challenges.
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A Justice Department spokesperson said Attorney General instructed US Attorneys “to prioritize investigating any abuse of taxpayer dollars” but did not specifically mention Powell.
Powell has served at the Fed under four administrations. He emphasized in his statement that while no one is “above the law,” the timing and nature of the investigation should be viewed “in the broader context of the administration’s threats and ongoing pressure.”
The Fed cut interest rates three times in 2025 — in September, October, and December — bringing the benchmark rate down to a range of 3.5% to 3.75%. However, the December cut featured three dissents, the most since 2019, reflecting deep divisions within the central bank over balancing inflation concerns against labor market weakness.
Meanwhile, the Justice Department has yet to release all of the Epstein files.
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