Justice Department opens criminal probe into Fed chair over renovation testimony

WASHINGTON (CN) — Federal Reserve Chair Jerome Powell announced Sunday night that the Justice Department had opened a criminal investigation into the nation’s central bank over his testimony to Congress last summer about the Fed’s multibillion-dollar renovation project.

The probe marks a significant escalation in President Donald Trump’s campaign to bend the Federal Reserve to his will — Trump has repeatedly called on Powell to lower interest rates to temporarily boost the economy — and comes months after he sought to remove Powell’s colleague on the Board of Governors, Lisa Cook.

In a video address, Powell revealed the Justice Department served him and the bank with subpoenas on Friday related to his testimony before the Senate Banking Committee last June regarding the Fed’s $2.5 billion renovation of two office buildings.

The Federal Reserve posted the video on X, in which Powell urged Americans to consider the unprecedented investigation “in the broader context of the administration’s threats and ongoing pressure” against him and the Fed. He slammed the assertion that the investigation was focused on his testimony or renovation projects as pretexts.

“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 interests of the president,” Powell said. “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.”

Trump has criticized the project as excessive, although after a publicized tour with Powell on July 24, 2025, the president largely stopped commenting on the renovation’s price tag. In an interview to NBC News Sunday, Trump insisted he had no prior knowledge of the DOJ investigation.

“I don’t know anything about it, but he’s certainly not very good at the Fed, and he’s not very good at building buildings,” Trump said.

Powell highlighted the fact he has served on the Federal Reserve Board of Governors since 2012, and as chairman since 2018, under both Republican and Democratic administrations. He defended his work, saying he carried out his duties “without political fear or favor” and has focused entirely on the Fed’s mission of “price stability and maximum employment.”

“Public service sometimes requires standing firm in the face of threats. I will continue to do the job the Senate confirmed me to do, with integrity and a commitment to serving the American people,” Powell concluded.

News of the Justice Department probe into the Fed chairman landed with a thud on Capitol Hill, where some lawmakers have for months accused the agency of exacting Trump’s political retribution on the central bank’s board. But, unlike the administration’s targeting of Cook, the move to investigate Powell has riled a key Senate Republican — and has thrown into jeopardy any effort to install a new Fed chair.

North Carolina Senator Thom Tillis came out swinging against the Powell probe on Sunday night, writing in a statement that “advisers” within the Trump administration were “actively pushing to end the independence of the Federal Reserve.”

“It is now the independence and credibility of the Department of Justice that are in question,” said Tillis.

The North Carolina Republican, who plans to retire at the end of his term, also said that he would oppose the Senate confirmation of Trump nominees for the Fed, including for chairman of its board. Tillis’ blockade all but guarantees any potential White House replacement for Powell, Cook or other members of the Fed’s governing body will not have the necessary votes to pass the Senate.

So far, other Senate Republicans have remained largely silent about the investigation into Powell. But Democrats, digging in their heels, agreed with Tillis that the upper chamber should not vote to confirm Trump’s Fed nominees.

“Trump wants to nominate a new Fed Chair AND push Powell off the Board for good to complete his corrupt takeover of our central bank,” said Massachusetts Senator Elizabeth Warren, who sits on the Senate’s banking committee. “The Senate must not move ANY Trump Fed nominee.”

In a long thread posted to X on Sunday night, Virginia Senator Mark Warner said the Justice Department probe was just the latest example of the Trump administration’s “chaos-driven approach” to the economy and that moves to strip the Fed of its independence would create uncertainty in the market.

“Using the threat of criminal prosecution to pressure the Fed over interest rates is a direct assault on that foundation and puts the economic security of millions of Americans at risk,” Warner wrote.

Senate Minority Leader Chuck Schumer chalked the Justice Department probe up to “bullying.”

“Anyone who is independent and doesn’t just fall in line behind Trump gets investigated,” the top Senate Democrat said in a statement. “Jay Powell and the Fed aren’t the reason Trump’s economy and his poll numbers are in the toilet. If he’s looking for the person who caused that he should look in the mirror.”

Last August, Trump moved to terminate Federal Reserve Board of Governors member Lisa Cook based on claims of mortgage fraud. Federal Housing Finance Agency Director William Pulte, a Trump appointee, made a criminal referral to Attorney General Pam Bondi and DOJ Special Attorney Ed Martin asserting Cook had wrongfully claimed two different houses as her main residence in 2021 to obtain better loan terms.

Cook denied any wrongdoing — Trump employed identical claims against political opponents like New York Attorney General Letitia James and U.S. Representative Eric Swalwell — and filed suit in the U.S. District Court for the District of Columbia.

In the suit, Cook argued that her firing clearly violated the Federal Reserve Act’s requirement that a Federal Reserve governor can only be removed for inefficiency, neglect of duty, malfeasance in office or comparable misconduct.

Both U.S. District Judge Jia Cobb and a D.C. Circuit panel rejected the president’s effort to immediately remove Cook, finding the administration violated her due process rights by failing to provide notice of the mortgage fraud claims and an opportunity to respond.

Further, Cook’s position at the Federal Reserve and her firing raised significant separation of powers concerns amid the Trump administration’s broader push to remove Trump skeptics throughout the federal government and install loyalists.

Cook’s case is currently pending before the Supreme Court, where arguments are scheduled for Jan. 21.

As of Monday morning, the Trump administration has not yet taken any formal action to remove Powell as chairman of the Fed. But Fox News has reported that the White House plans to interview Rick Rieder, a chief investment officer at global private equity firm BlackRock, as one possible candidate for the position as early as this week.

The Wall Street Journal further reported Monday that Powell had hired Washington firm Williams & Connolly as outside counsel before the criminal investigation was announced, suggesting Powell may follow Cook’s example and take his fight to the courts first.

The Justice Department did not respond to a request for comment.

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