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The Trump administration has threatened to indict Federal Reserve chair Jerome Powell over congressional testimony he gave last summer about a Fed building project, an action Powell called a “pretext” to gain more influence over the central bank and monetary policy.
The development in the long-simmering effort by U.S. President Donald Trump for greater control over the Fed had immediate fallout, with Republican Sen. Thom Tillis, a member of the Senate’s banking committee, which vets presidential nominees for the Fed, saying in a statement on X that the threatened indictment puts the Department of Justice’s “independence and credibility” in question.
Tillis said he would oppose any Trump nominees to the Fed, including the president’s coming choice of a new chair, “until this legal matter is fully resolved.”
Powell revealed the subpoenas and threats in a Sunday night statement.
“On Friday, the Department of Justice served the Federal Reserve with grand jury subpoenas, threatening a criminal indictment related to my testimony before the Senate Banking Committee last June,” Powell said in a statement on Sunday.
“I have deep respect for the rule of law and for accountability in our democracy. No one —certainly not the chair of the Federal Reserve — is above the law,” Powell said in the brief statement released by the Fed late on Sunday.
“But this unprecedented action should be seen in the broader context of the administration’s threats and ongoing pressure” for lower interest rates, he said.
The past three heads of the U.S. Federal Reserve and 10 former economic policymakers appointed by both Republican and Democratic administrations condemned the probe in a statement on Monday.
“The reported criminal inquiry into Federal Reserve Chair Jay Powell is an unprecedented attempt to use prosecutorial attacks to undermine that independence,” a statement signed by former Fed chairs Janet Yellen, Ben Bernanke and Alan Greenspan said.
“This is how monetary policy is made in emerging markets with weak institutions, with highly negative consequences for inflation and the functioning of their economies more broadly. It has no place in the United States whose greatest strength is the rule of law, which is at the foundation of our economic success.”
Trump denies knowledge
Trump told NBC News on Sunday that he had no knowledge of the Justice Department’s actions.
“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.
But Powell is among a number of officials and politicians who Trump perceives as adversaries to face indictment or the threat of prosecution in the past year. They include Trump’s former national security adviser John Bolton, former FBI director James Comey, New York Attorney General Letitia James and Democratic Sen. Adam Schiff of California.
Trump has also sought to fire Fed governor Lisa Cook, an unprecedented step, though she has sued to keep her job and courts have ruled she can remain in her seat while the case plays out. The Supreme Court will hear arguments in that case on Jan. 21.
During his 2024 presidential campaign, Trump railed against what he viewed as the politicization of the Justice Department, as he faced two criminal indictments that never made it to trial — one for unlawfully possessing classified documents and another for a criminal conspiracy to prevent the certification of his 2020 election loss.
Trump has demanded the Fed cut rates sharply since resuming office in January, blaming its policy for holding back the economy and musing about firing Powell despite the legal protections ostensibly covering the Fed chair from removal.
A Justice Department spokesperson declined to comment on the case but added: “The Attorney General has instructed her U.S. Attorneys to prioritize investigating any abuse of taxpayer dollars.”
U.S. President Donald Trump said in a letter posted on his Truth Social platform that he is removing Federal Reserve governor Lisa Cook effective immediately. Cook said she would not step down and Trump has no authority to fire her.
‘Low point’ in presidency, says historian
The independence of central banks, at least in setting interest rates in order to control inflation, is considered a central tenet of robust economic policy, insulating monetary policymakers from short-term political considerations and allowing them to focus on longer-term efforts to keep prices relatively stable.
The inquiry into Powell could roil markets and “is a low point in Trump’s presidency and a low point in the history of central banking in America,” said Peter Conti-Brown, a Fed historian at the University of Pennsylvania.
“Congress did not design the Fed to reflect the president’s daily fluctuations, and because the Fed has rebuffed President Trump’s efforts to take the Fed down, he is launching the full weight of American criminal law against its chair.”
Andrew Chang explains why Trump is upset with Federal Reserve chair Jerome Powell and how he could try to remove him. Plus, how Canada’s geography and technology can help detect missile threats and whether Trump can build a Golden Dome without Canada.
Trump elevated Powell to the chair’s job during his first term, but quickly soured on him and made his opinions clear in a series of rebukes and threats.
Powell, for his part, had largely eschewed comment on the president’s actions or statements, instead acknowledging that chief executives often express opinions about a variety of issues, and pledging, as he did in the Sunday statement, to “continue to do the job the Senate confirmed me to do.”
While Powell’s term as chair ends in May, he has the right to continue on the Fed board of 19 policymakers until Jan. 31, 2028, depriving the president of an additional Fed appointment — what would be Trump’s fourth on the seven-member board — until near the end of his term.
The White House began early last year criticizing the Fed’s $2.5-billion US renovation of two of its buildings in Washington, describing it as overly costly and ostentatious.
WATCH | The Fed released video last year to counter misinformation:
Some analysts at the time called it a pretext for the Trump administration’s pressure campaign for lower interest rates, but Powell did not. The Fed chair instead posted detailed explanations of the work on the central bank’s website and sent letters to members of the Trump administration providing background.
In June, when Powell gave his usual twice-yearly testimony on monetary policy to Congress, he was asked repeatedly about the work, which he explained as being necessary updates to outdated infrastructure, with both buildings dating back to the 1930s.
Sen. Tim Scott of South Carolina, chair of that chamber’s banking committee, said the Fed’s building renovation included “rooftop terraces, custom elevators that open into VIP dining rooms, white marble finishes and even a private art collection.” Powell disputed those details in his testimony.
In July, Trump made a rare presidential visit to the site, and Powell gave him a tour. Fed staff also gave media tours, seeking to highlight many costs they said were largely out of their control: blast-resistant windows and other security upgrades, modern electronics and HVAC systems.
