The Trump administration has launched a criminal investigation into Federal Reserve Chair Jerome Powell, accusing him of lying to Congress about headquarters renovations. Powell calls the allegations pretexts to force interest rate cuts. The probe escalates tensions as the Supreme Court prepares to hear a related case on Fed independence.
The Department of Justice served the Federal Reserve with grand-jury subpoenas on Friday, January 10, 2026, as part of a probe into claims that Chair Jerome Powell misled Congress regarding renovations to the Fed's century-old headquarters in Washington, D.C. Powell described the allegations as transparent “pretexts” for Donald Trump’s motive: coercing the agency into cutting interest rates based on “the preferences of the president” rather than “our best assessment of what will serve the public.”
The $2.5 billion project encountered complications, including asbestos, lead, and groundwater issues, which drove costs beyond initial estimates. A federal commission overseeing the work rejected cost-cutting, insisting on materials like marble to maintain historical fidelity. There is no evidence that Powell misused taxpayer dollars or that his congressional testimony contained falsehoods.
This investigation follows Trump's repeated demands for rate slashes since his return to office, despite the Fed's legal independence. By statute, presidents can remove Fed governors only “for cause,” a step no leader has taken since the bank's 1913 founding. In August 2025, Trump tried to fire board member Lisa Cook over alleged mortgage fraud, but courts blocked it—a federal judge ruled in September that cause was insufficient, and an appeals court agreed. The DOJ appealed to the Supreme Court, which denied immediate removal but scheduled oral arguments for January 21, 2026.
The Powell probe appears linked to Cook's case, signaling Trump's broader intent to control the Fed. Cook's lawyer, Paul Clement, is expected to highlight it in court. Powell, a lifelong Republican first appointed by Trump, now faces potential criminal charges for what critics call a fabricated offense, underscoring risks to the central bank's autonomy amid economic policy pressures.
