• Powell released rare video statement condemning DOJ investigation as attack on central bank independence
• Justice Department served Federal Reserve with grand jury subpoenas Friday over headquarters renovation testimony
• Fed chair vows to continue serving with integrity despite unprecedented pressure from administration

WASHINGTON, DC (TDR) — Federal Reserve Chair Jerome Powell issued an extraordinary public rebuke of the Trump administration Sunday, calling a newly launched criminal investigation against him a transparent effort to intimidate the central bank into slashing interest rates.

The Department of Justice served the Federal Reserve with grand jury subpoenas Friday threatening criminal indictment over Powell’s June 2025 congressional testimony about the Fed’s headquarters renovation project. The U.S. Attorney’s Office for the District of Columbia, now led by Trump appointee Jeanine Pirro, opened the probe in November.

In a rare video statement posted Sunday evening, Powell characterized the investigation as pretext resulting from his refusal to bend monetary policy to presidential preferences.

“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.”

Freedom-Loving Beachwear by Red Beach Nation - Save 10% With Code RVM10

Powell defended his four-decade record of public service across Republican and Democratic administrations, saying he has “carried out my duties without political fear or favor.” The Fed chair’s statement framed the investigation as a fundamental challenge to whether monetary policy will remain “evidence-driven” or succumb to “political pressure or intimidation.”

Investigation Centers on Renovation Testimony

The criminal probe examines whether Powell accurately characterized the scope and cost of the Federal Reserve’s $2.5 billion headquarters renovation during his appearance before the Senate Banking Committee in June 2025.

During that testimony, Powell told lawmakers there were “no new marble,” “no special elevators,” and “no new water features” in the renovation of the historic Eccles Building. He explained the project was necessary because the building was “not really safe” and not waterproof, adding that no Fed chair “wants to do a major renovation of a historic building during their term in office.”

CLICK HERE TO READ MORE FROM THE THE DUPREE REPORT

The renovation cost increased from an initial $1.9 billion estimate in 2019 to $2.5 billion, with the Federal Reserve citing unforeseen conditions including more asbestos than anticipated, toxic soil contamination, and a higher-than-expected water table. The project, approved by the Fed’s board in 2017, is funded by the central bank itself rather than taxpayers.

Trump’s Escalating Attacks on Fed Chair

President Trump has waged a months-long pressure campaign against Powell, whom Trump originally appointed in 2017. At a December press conference with Israeli Prime Minister Benjamin Netanyahu, Trump threatened to sue Powell for “gross incompetence” over the renovation costs, calling the Fed chair a “fool.”

“We’re thinking about bringing a suit against Powell for incompetence,” Trump told reporters, contrasting the Fed’s renovation with his White House ballroom project. “I would fire him. I’d love to fire him. But we’re so close, you know. But maybe I still might.”

The president’s attacks extend beyond construction costs to Powell’s interest rate decisions. Trump has repeatedly criticized Powell for not cutting rates aggressively enough, dubbing him “Too Late” Powell and demanding immediate rate reductions despite the Fed’s concerns about inflation.

The Federal Reserve cut rates by 75 basis points cumulatively in 2025, significantly less than Trump demanded. Powell cited caution over inflation and the impact of Trump’s policies as reasons for the measured approach.

Trump told The New York Times last week he has already selected Powell’s replacement when the Fed chair’s term expires in May 2026. White House economic advisor Kevin Hassett and former Fed governor Kevin Warsh are considered frontrunners for the position.

Historical Precedent and Fed Independence

The confrontation raises fundamental questions about Federal Reserve independence, a cornerstone of U.S. monetary policy since the 1951 Treasury-Fed Accord. The Federal Reserve Act provides that Fed governors can be removed “for cause” only, a protection reinforced by the Supreme Court’s 1935 Humphrey’s Executor decision.

In May 2025, the Supreme Court described the Federal Reserve as “a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States,” distinguishing it from other agencies while ruling on presidential removal powers.

The U.S. Chamber of Commerce has emphasized that Fed independence “traces back to the 1790s” and remains “essential for a strong economy and financial stability.”

Justice Department spokesperson Chad Gilmartin declined to comment on the investigation but said in a statement to CNN that the attorney general wants to “prioritize investigating any abuse of tax payer dollars.”

Powell closed his statement by vowing to “continue to do the job the Senate confirmed me to do, with integrity and a commitment to serving the American people.” Markets showed limited immediate reaction to the announcement, though the U.S. dollar fell 0.3% against a basket of currencies in Sunday evening trading.

Will the Trump administration’s criminal investigation succeed in pressuring the Federal Reserve to abandon its independence, or will historical legal protections hold firm?

Freedom-Loving Beachwear by Red Beach Nation - Save 10% With Code RVM10