DOJ Subpoenas Central Bank; Powell Says It Threatens Fed Independence/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ Federal Reserve Chair Jerome Powell revealed that the Department of Justice has issued subpoenas and threatened criminal charges over his testimony about costly building renovations. He warned the move threatens the Fed’s independence and accused the Trump administration of using pretexts to influence monetary policy. The DOJ action reignites tensions between the president and the central bank, alarming economists and lawmakers alike.
Trump DOJ vs Powell Quick Looks
- Fed Chair Jerome Powell says DOJ issued subpoenas and threatened criminal indictment.
- Subpoenas relate to Powell’s June testimony about $2.5B Fed building renovations.
- Powell accuses the Trump administration of attempting to politicize the Federal Reserve.
- Powell: DOJ actions are “pretexts” to undermine Fed’s monetary policy independence.
- Trump denies ordering the investigation but suggests no issue with its existence.
- Markets expected to react negatively with potential “sell-America” pressure on Monday.
- Powell’s term ends in May; Trump may soon name a replacement.
- Fed Governor Lisa Cook also faces removal as Trump challenges her appointment.
- Powell denied claims of excessive renovation features during Senate hearing.
- DOJ says it is investigating taxpayer abuse but won’t comment on specifics.
DOJ Subpoenas Fed Chair; Powell Says It Threatens Fed Independence
Deep Look
Federal Reserve Chair Jerome Powell announced Sunday that the U.S. Department of Justice has subpoenaed the central bank and issued a warning of potential criminal charges against him—escalating tensions between the Trump administration and the independent financial institution.
The DOJ subpoenas, Powell confirmed, focus on his June 2025 testimony before the Senate Banking Committee, which addressed the Federal Reserve’s $2.5 billion renovation project involving two of its office buildings. President Trump and allies have publicly criticized the renovations, calling them excessive, with claims about luxury upgrades and mismanagement.
In a rare video statement released Sunday, Powell directly addressed the situation, casting aside the quiet restraint he’s typically maintained in response to political criticism. He called the threats “pretexts,” asserting that the real motive is political pressure on the Fed to lower interest rates ahead of the election cycle.
“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,” Powell said. “This is about whether monetary policy will be based on evidence—or on political intimidation.”
Trump, speaking briefly with reporters Sunday, said he was unaware of the subpoenas but denied that the investigation was meant to pressure Powell on rate decisions.
“No. I wouldn’t even think of doing it that way,” he said.
Powell’s term as chair ends in May 2026, and there has been speculation that Trump intends to replace him. Administration insiders have also confirmed ongoing efforts to remove Fed Governor Lisa Cook, whom Trump has sought to fire despite her legally protected appointment. Cook has taken legal action, and her case is set to be heard by the Supreme Court on January 21.
The June hearing in question included allegations from Republican Senator Tim Scott that the building renovations included VIP elevators, rooftop terraces, and marble finishes—claims Powell firmly denied.
“There’s no new marble. There are no special elevators,” Powell told lawmakers, adding that controversial elements were not part of the final plans.
Despite Powell’s rebuttals, criticism from the Office of Management and Budget followed, with director Russell Vought raising doubts about the project’s compliance with prior approvals. Trump visited the site shortly after and, while standing beside Powell, exaggerated the project’s cost. Later, Trump publicly downplayed the issue, saying, “they have to get it done.”
The executive order Trump signed last week aims to protect Venezuelan oil revenue from court seizures, and it aligns with broader efforts by the administration to reshape federal institutions and assert control over agencies traditionally insulated from political influence.
Wall Street analysts have warned the DOJ’s actions may lead to instability in markets. Krishna Guha, a senior strategist at Evercore ISI, described the news as “deeply disturbing” and predicted a significant market dip on Monday.
“We are stunned by this development,” Guha wrote in a client briefing, noting the return of conflict between the White House and the Fed could undermine the global trust in U.S. financial institutions.
The Justice Department declined to comment specifically on the investigation but emphasized that Attorney General Pam Bondi has prioritized scrutiny of taxpayer spending. A spokesperson for U.S. Attorney Jeanine Pirro’s office also declined to offer details, citing ongoing proceedings.
Senator Thom Tillis, a Republican from North Carolina and member of the Banking Committee, said the DOJ’s move raises serious questions about political interference in the Fed’s operations.
“If there were any remaining doubt that the Trump administration is actively working to end the independence of the Federal Reserve, there should now be none,” Tillis said, pledging to oppose any Fed nominees until the issue is resolved.
The Federal Reserve has long been viewed as an apolitical guardian of monetary stability, but this latest development adds to a pattern of Trump-aligned interventions into historically independent institutions. Powell, appointed to the Fed chair by Trump in 2017, had largely avoided confrontation—until now.
This public break from protocol by Powell could reshape not only the future of the Fed but also how investors and foreign governments perceive the U.S. financial system heading into a turbulent election year.
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