Federal Reserve Chairman Powell Under Criminal Investigation! His Response: Political Threats Under the Guise of Law

The Federal Reserve Chair Jerome Powell confirmed this morning that federal prosecutors have launched a criminal investigation against him. The investigation appears to focus on the $2.5 billion renovation project of the Federal Reserve headquarters and his congressional testimony, but in reality, it is related to the Fed’s failure to meet the expectations of the Trump administration regarding interest rate adjustments. This move has not only caused turbulence in the financial markets but also brought the Fed’s long-standing independence back into the spotlight.

Powell Under Criminal Investigation by U.S. Department of Justice, Headquarters Renovation as Reason

Powell stated that the U.S. Department of Justice has issued a grand jury subpoena to the Federal Reserve, concerning his testimony last year before the Senate Banking Committee regarding the renovation plan of the Fed headquarters’ historic building. The project, with a total budget of approximately $2.5 billion, is being questioned by the Justice Department over potential misuse of public funds or false statements.

In July this year, President Trump and Powell made a rare joint inspection of the headquarters construction site. At that time, Trump joked about the project’s budget overruns, although he later clarified he would not dismiss Powell over it. Nevertheless, Powell has now received a subpoena.

(Trump personally visits FED site for inspection, jokes: No need to dismiss Powell, but please cut rates quickly)

Powell admits that “interest rate policy” is the main reason: Political pressure under the guise of legality

In a statement, Powell expressed respect for the rule of law and accountability but pointed out that the renovation project and congressional oversight are only “superficial reasons,” and that progress has always been publicly available:

The threat of criminal charges stems from our long-standing practice of setting interest rates based on economic data and professional judgment, rather than following the president’s preferences.

He emphasized, “No one is above the law. This unprecedented action should be viewed in the context of threats and ongoing pressure from the current government.”

The outcome of this incident is crucial, as it will influence the future direction of U.S. interest rate policy—whether it will be driven by evidence and economic conditions or influenced by political pressure or intimidation.

Following this response, U.S. stock market futures fell sharply, reflecting market concerns about the political action’s impact on the stability and independence of the Federal Reserve.

Long-term Tensions Between Trump Administration and the Federal Reserve

Since Trump returned to the White House in January 2025, he has repeatedly called for significant and rapid interest rate cuts and expressed dissatisfaction with the Fed and Powell’s decisions, ranging from personal attacks to threats of dismissal. Now, issuing a subpoena is the latest tactic.

Although Powell was initially nominated by Trump in 2017 to serve as Chair, disagreements over monetary policy have deepened over time. Trump has also publicly stated multiple times that he plans to nominate a different candidate after Powell’s term ends in May next year, with potential candidates including former Fed Governor Kevin Warsh and current White House National Economic Council Director Kevin Hassett.

However, market observers note that even if Powell steps down as Chair, he can remain on the Board of Governors until 2028.

(Crypto-friendly and current White House economic advisor Kevin Hassett may succeed Powell as Federal Reserve Chair)

From Dismissals to Subpoenas, Politics Enter the Federal Reserve’s Concerns

Several Republican and Democratic senators have expressed concerns that this investigation could impact the independence of the Fed and the credibility of the Department of Justice. It is reported that the case is handled by the U.S. Attorney’s Office for the District of Columbia, led by Jeanine Pirro, a Trump appointee, which further fuels suspicions of political interference.

In August, Trump also dismissed Federal Reserve Governor Lisa Cook over mortgage fraud allegations and nominated Stephen Miran, chairman of the Economic Advisory Council, as her replacement to gain voting advantage. The future power structure and policy direction of the Fed remain uncertain.

(Did Trump dismiss Fed Governor Cook over mortgage fraud to gain voting advantage?)

This article: Federal Reserve Chair Jerome Powell Under Criminal Investigation! Response: Political Threat Under the Guise of Law was first published by Link News ABMedia.