Federal Prosecutors Launch Criminal Investigation into Fed Chair Jerome Powell Amid Escalating Trump Tensions

Washington, D.C. – January 12, 2026 – In a stunning and unprecedented development, federal prosecutors have opened a criminal investigation into Federal Reserve Chair Jerome H. Powell, focusing on whether he provided misleading testimony to Congress regarding the scope and costs of a major renovation project at the central bank's Washington headquarters.

The probe, confirmed by Powell himself in a rare video statement released Sunday evening, centers on his June testimony before the Senate Banking Committee. During that appearance, Powell addressed criticisms of the multi-year, $2.5 billion renovation, denying claims of extravagant features like "special elevators" or rooftop gardens and attributing cost overruns to unforeseen factors. Prosecutors are now examining whether those statements constituted false or misleading information to Congress.

The U.S. Attorney’s Office in the District of Columbia, led by Jeanine Pirro—a Trump ally appointed last year—approved the inquiry in November, according to officials briefed on the matter. Grand jury subpoenas were served to the Federal Reserve late last week, threatening potential criminal indictment.

Powell, in his direct-to-camera message, described the investigation as “unprecedented” and dismissed the renovation issue as a mere pretext. He bluntly accused the Trump administration of using the threat of criminal charges to pressure the Federal Reserve into slashing interest rates more aggressively—something the central bank has resisted despite repeated public demands from President Donald Trump.

“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 stated. “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.”

The investigation marks a dramatic escalation in the long-simmering feud between Trump and Powell, whom the president appointed to the role during his first term. Trump has repeatedly criticized Powell as “Mr. Too Late” for not cutting rates faster, blaming high borrowing costs for economic headwinds. The two even toured the renovation site together in July 2025, where Trump publicly disputed Powell's cost figures.

Markets reacted swiftly to the news: The U.S. dollar weakened, gold prices surged to record highs, and stock futures dipped as investors grappled with fresh concerns over the Federal Reserve’s cherished independence—a cornerstone of global financial stability.

The move has drawn sharp bipartisan backlash. Former Fed chairs Alan Greenspan, Ben Bernanke, and Janet Yellen, along with other ex-officials, condemned it as an assault with “no place” in the United States. Republican Senator Thom Tillis of North Carolina, a member of the Senate Banking Committee, vowed to block confirmation of any new Fed nominees—including Trump’s expected pick to replace Powell when his chair term ends in May—until the matter is resolved. Democratic leaders, including Senator Elizabeth Warren, accused the administration of attempting a “corrupt takeover” of the central bank.

A Justice Department spokesperson declined to comment on the specifics but emphasized that Attorney General Pam Bondi has directed U.S. attorneys to prioritize probes into “any abuse of taxpayer dollars.”

President Trump, speaking to NBC News on Sunday, denied knowledge of the investigation and reiterated his frustration with Powell’s rate decisions, saying, “He’s certainly not very good at the Fed, and he’s not very good at building buildings.”

Powell’s term as chair concludes in May, though he remains a Fed governor until 2028. The controversy comes as the central bank prepares for its next policy meeting later this month, with expectations of a pause in recent rate cuts.

Legal experts warn that any sustained attack on Fed leadership could erode investor confidence in U.S. institutions and the dollar’s global standing. For now, the probe has thrust the normally apolitical central bank squarely into the center of Washington’s partisan battles.

17GEN4.com