DOJ Criminal Probe Targets Fed Chair Powell Over DC Building Renovation and Congressional Testimony
Summary:
Federal Reserve Chairman Jerome Powell faces a criminal investigation by Trump-appointed U.S. Attorney Jeanine Pirro regarding the Fed’s $2.5 billion headquarters renovation and related congressional testimony. The probe escalates President Trump’s long-standing criticism of Powell’s interest rate decisions, with Powell calling it political intimidation threatening Fed independence. Market reactions include falling stock futures and increased safe-haven demand as analysts warn of institutional damage to central bank autonomy. Senators from both parties condemn the investigation as an unconstitutional attack on monetary policy independence.
What This Means for You:
- Market volatility risk: Monitor treasury yields and gold prices as political uncertainty may trigger capital flight from US assets
- Interest rate uncertainty: Prepare contingency plans for potential disruptions to projected Fed policy paths in 2026-2027
- Institutional precedent: Watch Supreme Court developments regarding Fed Governor Lisa Cook’s parallel removal case
- Political risk warning: Expect increased pressure on financial institutions as Trump prepares to appoint new Fed leadership
Original Post:
Federal prosecutors are conducting a criminal investigation of Federal Reserve Chairman Jerome Powell focused on the $2.5 billion renovation to the central bank’s headquarters in Washington, D.C., and his related testimony to Congress, he said on Sunday evening.
Powell said the probe is the result of longstanding frustration by President Donald Trump over the Fed’s refusal to cut interest rates as quickly and as much as the president has demanded.
“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,” Powell said in a video statement tweeted by the Fed’s X account.
The chairman warned that the outcome of the investigation will determine the future of the central bank’s decisions. “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,” Powell said.
Department of Justice subpoenas threaten a criminal indictment related to Powell’s Senate Banking Committee testimony last June concerning the renovation project. Powell maintains the investigation is pretextual, noting full Congressional disclosure regarding the building improvements.
Senate Banking Committee members Thom Tillis (R-NC) and Elizabeth Warren (D-MA) jointly condemned the investigation as undermining Fed independence. Trump denied involvement while criticizing Powell’s monetary policy and building management skills.
The Supreme Court will hear arguments regarding parallel removal efforts against Fed Governor Lisa Cook later this month. Analysts predict market turbulence similar to April 2025’s “tariff shock” risk premium event.
Extra Information:
New York Times Original Report: Details prosecutorial strategy and internal DOJ discussions.
CNBC Fed Renovation Timeline: Documents origins of controversial $2.5 billion modernization project.
Powell’s Official Response: Full video transcript outlining constitutional concerns.
People Also Ask About:
- Can a sitting Fed chair face criminal indictment? Yes, but no precedent exists for charges related to monetary policy decisions.
- What happens to interest rates during Fed leadership crises? Historical precedent suggests policy paralysis or reactive hikes to demonstrate independence.
- How does this affect Trump’s upcoming Fed chair nomination? Increases likelihood of hardline political appointee like ex-Governor Kevin Warsh.
- Would Powell’s removal trigger constitutional challenges? Yes, under Federal Reserve Act Section 10 regarding removal for cause requirements.
Expert Opinion:
“This crosses a dangerous institutional threshold” warns former Fed General Counsel Scott Alvarez. “Charging decisions based on interest rate disagreements fundamentally undermine the legal foundations of central bank independence established since 1951 Treasury Accord. Markets may now price in political risk premiums previously reserved for emerging economies.”
Key Terms:
- Federal Reserve criminal investigation legal precedent
- Monetary policy political interference consequences
- Fed building renovation Congressional testimony dispute
- Trump administration Federal Reserve independence
- Central bank governance crisis implications
- DOJ subpoenas Federal Reserve Chair
- Jeanine Pirro U.S. Attorney Fed probe
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