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In November 2025,federal prosecutors in Washington, D.C., opened a criminal investigation intoJerome H. Powell, theChair of the Federal Reserve, concerning the renovation of the Federal Reserve’s headquarters and whether Powell made false or misleading statements toCongress about the scope and cost of the project. The inquiry, approved by U.S. AttorneyJeanine Pirro, involves a review of Powell’s congressional testimony and an examination of internal spending and planning records related to the renovation.
The investigation marks a significant escalation in the long-running conflict between PresidentDonald Trump and Powell, whom Trump has repeatedly criticized for resisting pressure to sharply cut interest rates. Trump has publicly accused Powell of “incompetence,” threatened to remove him from office, and raised the prospect of legal action tied to the renovation project. As of January 2026, Powell has not been charged with any crime.
Powell was nominated to theFederal Reserve Board of Governors by PresidentBarack Obama in 2011 and was elevated to the position of Chair by President Trump in 2018.[1][2] He was later reappointed to a second term as chair by PresidentJoe Biden.[3] Powell’s term as chair is scheduled to end in May 2026, though his term as a governor runs through January 2028.[4]
TheFederal Reserve is an independent central bank whose authority to set monetary policy is insulated by statute from direct presidential control. Presidents may remove members of the Board of Governors only “for cause,” a standard historically interpreted to require malfeasance or serious dereliction of duty.[4]
Tensions between Trump and Powell intensified as Trump repeatedly demanded large interest-rate cuts and accused the Fed of undermining economic growth, while Powell defended the central bank’s decisions as necessary to control inflation and preserve long-term economic stability.[4]
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The renovation project at the center of the investigation involves the modernization of theEccles Building and theFederal Reserve Board East Building in the District of Columbia.[5][6] The buildings, constructed in the 1930s, had not undergone a comprehensive renovation in decades.[7][4] The renovations were approved by the Federal Reserve Board in 2017 and have been subject to annual reviews by the board.[6][7] Ownership of the East Building was transferred to the Federal Reserve in 2018 by thefirst Trump administration to allow for the then-vacant building to be renovated and used by the Federal Reserve to reduce its need to lease office space for its staff.[5][6] The Federal Reserve'sinspector general has received monthly reports on the projects and is currently conducting a second review of them at Powell's request after conducting a previous review in 2021.[5][7] Construction began in 2022 and is scheduled for completion in 2027.[8][9]
The total projected cost of the renovations have grown to approximately $2.5 billion,[6] and thecost overruns led the Federal Reserve to cancel the renovation of a third building.[5][7] Federal Reserve officials have cited rising labor and materials costs due to the2021–2023 inflation surge,2021–2023 global supply chain crisis, and thesecond Trump administration's tariffs as contributing to the cost overruns.[6][7] Also, to bring the buildings up to the District of Columbia's currentbuilding code, the buildings required newplumbing, newelectrical,HVAC,water, andfire suppression systems, newaccessibility features for thedisabled (including in oneelevator), and the renovation has found higher levels ofasbestos and a higherwater table than was expected while also findinglead contamination in the ground underneath the buildings (which was not anticipated).[5][7] Powell and the Federal Reserve have denied that the building designs includeddining rooms or elevators for use only byVIPs or Federal Reserve Governors, rooftopterraces, and have asserted that the only proposedwater features that had been included in the initial renovation plan for the East Building were eliminated.[5][7]
Additionally, both the East Building and the Eccles Building are included in theDistrict of Columbia Inventory of Historic Sites while the East Building is also included in theNational Register of Historic Places,[6] and some of the cost overruns are due to changes to the design plans to comply withhistoric preservation laws for maintaininghistoric buildings and their appearance.[5][7] The Eccles Building and East Building are also located on theNational Mall, and the District's building code has a height restriction that requires that buildings not be taller than theUnited States Capitol, which requiredunderground construction to expand one of the buildings to include abasement and anaddition to the other for greater office space.[5][7] Due to their location and the historic preservation requirements, the renovations required consultation with theNational Capital Planning Commission, theUnited States Commission of Fine Arts, the District of Columbia Public Space Committee, the District of ColumbiaHistoric Preservation Office, and theNational Park Service.[6][9]
The investigation unfolded amid broader efforts by theTrump administration to challenge Federal Reserve leadership.[10][11] Trump has stated publicly that he has chosen a successor to Powell and is expected to announce the decision before Powell’s term as chair expires.Kevin Hassett, Trump’s chief economic adviser, has been widely reported as a leading contender,[12] however, at an event in mid January, Trump told Hassett "I actually want to keep you where you are, if you want to know the truth".[1]
TheU.S. Supreme Court is scheduled to hear oral arguments inTrump v. Cook on January 21 to determine whether Trump has the legal authority to remove Federal Reserve GovernorLisa Cook overmortgage fraud allegations.[13][14]
Trump has also sought to remove other Federal Reserve officials, including GovernorLisa D. Cook, prompting legal challenges over the scope of presidential authority to dismiss Fed governors.[15]
Powell stated that the subpoena threat raised fundamental questions about whether the Federal Reserve would be able to continue settingmonetary policy based on economic evidence rather than political pressure or intimidation.[16][17]
In January 2026, Powell stated that theDepartment of Justice had served the Federal Reserve with grand jury subpoenas threatening a criminal indictment related to his congressional testimony about the renovation project.[16][17][18] According to Powell, the subpoenas were issued on January 10, 2026.[17] As of January 28, the Federal Reserve had reportedly not yet complied with the subpoenas;[19] Powell declined to comment on the investigation at a press conference announcing theFederal Open Market Committee's interest rate decision that month.[20][21]
The investigation reportedly began in November 2025,[22] and unnamed sources have said that Jeanine Pirro's office issued the subpoenas without contacting the White House, Attorney GeneralPam Bondi, or Deputy Attorney GeneralTodd Blanche.[23][24] Pirro has defended the investigation by asserting that the subpoenas were issued because the Federal Reserve did not respond to her office's requests to discuss the cost overruns of the renovation projects, asserting: "This office makes decisions based on the merits, nothing more and nothing less."[25] A Justice Department spokesperson contacted about the investigation stated in a press release that Bondi "has instructed her U.S. Attorneys to prioritize investigating any abuse of taxpayer dollars",[26] while Pirro stated in an interview: "We're talking about $1 billion in cost overruns in DC and something that is purely in my lane as the United States attorney to investigate".[27] However, the Federal Reserve does not receive a congressionalappropriation asits budget (including for its building renovations) is instead entirely funded through itsopen market operations, byinterest payments received from banks on loans procured through the Federal Reserve'sdiscount window, and from other fees the Federal Reserve charges banks for other services (including check processing).[7][6][28][9]
Powell characterized the investigation as a pretext aimed at pressuring the Federal Reserve to lower interest rates, rather than a legitimate inquiry into his testimony or the renovation itself.[16][17] He stated that the Fed had made extensive efforts to keep Congress informed through testimony and public disclosures.[17]
According to reporting, prosecutors reviewed Powell’s public statements and requested documentation from Federal Reserve staff related to the renovation. As of mid-January 2026, it remained unclear whether prosecutors had convened a grand jury beyond issuing subpoenas or whether formal charges would be sought.[4]
Legal analysts have noted that opening an investigation or issuing subpoenas does not guarantee that charges will be filed, and that proving criminal false statements to Congress requires demonstrating that any misrepresentation was knowing, material, and willful.[4]
No criminal charges have been filed.[4] Powell has stated that he intends to continue carrying out his duties as chair with independence and integrity.[17]
In June 2025, Powelltestified before Congress regarding the renovation project. Under questioning, he denied that the current plans included luxury features such as VIP dining rooms, special elevators, or new marble installations, stating that existing marble was being reused where possible and that certain earlier proposals had been eliminated as plans evolved.[4]
Following the hearing, the Federal Reserve published a “Frequently Asked Questions” document and released additional materials, including photographs and annotated planning documents, reaffirming Powell’s testimony and explaining changes to the project over time.[29][4]
Critics argued that Powell’s testimony conflicted with earlier planning documents, raising questions about whether his statements were misleading. Powell has maintained that his answers accurately reflected the project as it existed at the time of his testimony.[30][4]
In July 2025, U.S. RepresentativeAnna Paulina Luna of Florida made acriminal referral to the Justice Department over Powell's testimony to the Senate Banking Committee the previous month.[31][32]
In a joint public statement released the day after Powell announced the subpoenas and investigation, former Federal Reserve ChairsAlan Greenspan,Ben Bernanke, andJanet Yellen, former U.S. Secretaries of the TreasuryHenry Paulson,Timothy Geithner,Robert Rubin, andJacob Lew, economistsGlenn Hubbard,Kenneth Rogoff, andJared Bernstein with others in defense of Powell that argued that the investigation was "an unprecedented attempt to use prosecutorial attacks to undermine [the Federal Reserve's] independence", and that "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".[33][34] In an interview withCNBC, Yellen further condemned the investigation and stated that Trump's demands for the Federal Reserve to cut itsinterest rates to lower interest payments on thenational debt "is the road to abanana republic."[35]
Likewise,New York Federal Reserve Bank PresidentJohn C. Williams,Chicago Federal Reserve Bank PresidentAustan Goolsbee,Minneapolis Federal Reserve Bank PresidentNeel Kashkari, andAtlanta Federal Reserve Bank PresidentRaphael Bostic publicly criticized the investigation as undermining the Federal Reserve'sindependence while speaking in defense of Powell's personal character, echoing concerns about potentially higherinflation, and asserting that the investigation is about the central bank'smonetary policies rather than the cost overruns of the renovation projects.[36][37] The day after the former Federal Reserve chairs and Treasury Secretaries issued their joint statement,European Central Bank (ECB) PresidentChristine Lagarde,Bank of England GovernorAndrew Bailey, and the executives of the central banks ofCanada,Sweden,Denmark,Switzerland,Australia,South Korea,Brazil, andFrance also issued a joint public statement in defense of Powell that stated: "The independence of central banks is a cornerstone of price, financial and economic stability in the interest of the citizens that we serve. It is therefore critical to preserve that independence, with full respect for the rule of law and democratic accountability."[38][39]
Bank of Japan GovernorKazuo Ueda reportedly did not sign the joint statement led by Lagarde and Bailey due to not receiving informal approval from thegovernment ofPrime MinisterSanae Takaichi in time for the statement's release.[40][41]Bank of Latvia GovernorMārtiņš Kazāks and former ECB President and Bank of France GovernorJean-Claude Trichet likewise argued that Powell's investigation was comparable to the conduct of monetary policy inemerging markets but that could threaten thestability of theglobal financial system, whileBank of Finland GovernorOlli Rehn warned of a structural rise in the global inflation rate if the Federal Reserve's independence were to be compromised that would likely require monetary policy decisions globally to protectprice stability and generaleconomic stability.[42][43][44] Nonetheless, ECB Vice PresidentLuis de Guindos stated thatcentral bank liquidity swap lines between the Federal Reserve and the ECB remained "business as usual".[45]International Monetary Fund DirectorKristalina Georgieva also spoke in defense of Powell and the Federal Reserve's independence given therole of the United States dollar as the world'sreserve currency.[46]
Whilefutures for theDow Jones Industrial Average, theNasdaq-100, and theS&P 500 fell before U.S.stock exchanges opened on the day after Powell's announcement,[47] all three indexes ultimately closed higher at the end of trading on January 12.[48][49] However, theU.S. Dollar Index showed the dollar falling against other major currencies in theforeign exchange markets,[50][51] while theprice of gold incommodity markets hit a record high,[52] and theyield on the 10-yearUnited States Treasury note rose, and theyield curve between the 2-year and 10-year Treasury notessteepened.[53][54] The Dow Jones, the Nasdaq, and the S&P 500 saw sell-offs over the next two days with concerns among investors about Federal Reserve independence contributing to the declines, along with news about theTrump administration's response to the2025–2026 Iranian protests, comments by Trump thatMicrosoft would make changes to absorb theelectricity costs of the data centers used for itsartificial intelligence products, as well as Trump's proposedceiling oncredit card interest rates andcontinued calls for the United States to acquire Greenland.[55][56][57]
The dollar weakened further on January 14 after recovering the day before on the release ofU.S. Consumer Price Index data,[58][59] both gold andsilver prices hit record highs on both days,[60][61] while yields on 2-year and 10-year Treasury notes fell despitebreak-even inflation on the 10-year Treasury note rising on January 13.[62][63][54] Despite a rally on January 15 on news of lowerunemployment insurance claims,[64][65] the Dow Jones, the Nasdaq, and the S&P 500 closed just below their opening bell valuations on January 16 and finished the week at a loss upon news that Trump suggested that the most likely candidate to replace Powell as Federal Reserve Chair had changed and threats by Trump to imposeimport tariffs oncountries that oppose the United States acquiring Greenland.[66][67][68] Over the same two days, the dollar strengthened,[69][70] gold prices fell,[71][72] and yields on 2-year and 10-year Treasury notes rose.[73][74] As indicated by the weakening of the U.S. dollar on itsexchange rates, the precious metals price increases, and the rising yields and steepening yield curve on Treasury notes in thebond market over the week following Powell's announcement,[75][76][54] market analysts have observed that the investigation and potential loss of the Federal Reserve's independence (along with the geopolitical risks) indicates higher long-term inflation expectations by investors and has reinforced interest for greater globaldiversification of investment holdings and away from U.S. assets.[77][78][79]
JPMorgan Chase CEOJamie Dimon andBNY CEO Robin Vince both criticized the investigation, arguing that undermining the Federal Reserve's independence would raise inflation expectations, increase interest rates in the long-term, and undermine the functioning of the bond market.[80][81] Economists have argued that if the Federal Reserve's independence were to be compromised by the investigation and the central bank were to become more subject to political influence to lower its interest rates, the U.S. economy would likely see lower borrowing costs and higherstock andasset prices in the short-term, but in the long-term would likely see a higher inflation rate, higher interest rates formortgages and otherloans, highervolatility in thestock market, and lower values forstocks,bonds, and otherfinancial assets.[82] The historical example economists cite as a precedent of what would likely occur if the Federal Reserve's independence were to be compromised is thestagflation experienced by theU.S. economy in the 1970s—which culminated in the1973–1975 recession and theearly 1980s recession—as it was caused primarily by PresidentRichard Nixon replacing Federal Reserve ChairWilliam McChesney Martin withArthur Burns to pressure the central bank to lower its interest rates prior to the1972 presidential election; economists also cite more recent international examples of runaway inflation andhyperinflation inArgentina,Russia,Turkey,Venezuela, andZimbabwe.[82][83][84]
Fitch Ratings officials have said that erosion of the Federal Reserve's independence will negatively impact thecredit rating forgovernment bonds issued by theU.S. Treasury Department, noting that central bank independence is a fundamental factor in determining such ratings forall countries.[85][86] However, market observers have suggested the pushback from central bankers, professional economists, and congressional Republicans may have led many investors to conclude that the investigation probably will not lead to a long-term shift in the central bank's independence.[76][84] Powell could remain the Federal Reserve Chair if theUnited States Senate does not confirm a replacement while Powell's term as a Federal Reserve Governor does not expire until 2028, and some observers have suggested that Powell may choose to serve the entire term to help preserve the central bank's independence—like Federal Reserve ChairMarriner Eccles did after PresidentHarry S. Truman declined to reappoint Eccles as chair in 1948 and led to the Federal Reserve's1951 Accord with the Treasury Department.[87][88] Powell has not publicly commented on whether he will do so or not.[89][90] Additionally, many legal commentators reportedly expect the U.S. Supreme Court to rule against the Trump administration in thelawsuit over the attempted removal of Federal Reserve Governor Lisa Cook in light of a ruling the Court issued the previous year and the oral arguments the Court held on January 21, 2026.[98]
On the same day of Powell's announcement, Trump denied having any knowledge of the investigation;[99][100] White House Press SecretaryKaroline Leavitt asserted that Trump did not order the Justice Department to investigate Powell.[101][102] After suggesting at press conferences and social media posting in August and December 2025 that the administration would sue Powell due to the cost overruns,[100][28] and after Powell announced that he was being targeted with an investigation, Trump said that Powell "either is incompetent or ... crooked" because of the cost overruns, and said that Powell will "be gone soon."[103][104] However, Trump also said the investigation would not affect the timing of appointing a new Federal Reserve Chair as a successor to Powell.[105] In an interview withReuters on January 14, Trump said that he has no plans to fire Powell and that it was "too early" to say whether he would have legal grounds to remove Powell.[106]
Trump also dismissed concerns that diminished Federal Reserve independence would lead to higher inflation, asserting that "A president should have something to say" about monetary policy, while criticizing Republican Senators who may oppose his future Federal Reserve nominations due to the investigation, calling them disloyal.[106] Secretary of the TreasuryScott Bessent has reportedly expressed concern that the investigation will cause volatility in the markets.[107][108] While unnamed sources within the White House have suggestedFederal Housing Finance Agency DirectorBill Pulte may be behind the investigation of Powell, Pulte has publicly denied the allegations.[102][27] In July 2025, Pulte called for Powell to be investigated over his testimony to Congress about the cost overruns for the renovation projects, and sent thereferral letter to Pam Bondi in August 2025 accusing Lisa Cook of mortgage fraud that led to Trump's attempt to remove Cook from her position and the subsequent litigation over the removal attempt.[109]
In response to the investigation announcement, Republican U.S. SenatorThom Tillis, who sits on theSenate Banking Committee, announced that he would oppose any Federal Reserve nomination (including for the vacancy of Powell's seat as chair in May 2026) until the legal matter was resolved, stating: "If there were any remaining doubt whether advisers within the Trump Administration are actively pushing to end the independence of the Federal Reserve, there should now be none. It is now the independence and credibility of the Department of Justice that are in question".[110] Tillis subsequently suggested that he would not support the nomination ofNational Economic Council DirectorKevin Hassett as Federal Reserve Chair to succeed Powell in light of Hassett's past relationship with Trump.[111] Hassett has stated that he is not involved in the investigation, but has stated that he supports it even though he does not expect findings of wrongdoing.[112][113]
Trump later made comments suggesting he would not appoint Hassett to replace Powell,[114][115] leading to speculation that former Federal Reserve GovernorKevin Warsh had become the leading candidate rather than Hassett, current Federal Reserve GovernorChristopher Waller, or GovernorMichelle Bowman.[116][117][118] Republican SenatorLisa Murkowski supported Tillis' proposal to block all Federal Reserve nominations in response to the investigation,[119] whileSusan Collins expressed concern that the investigation was launched in response to White House demands on the central bank's interest rate decisions.[120] Democratic SenatorElizabeth Warren, theranking member on the Senate Banking Committee, also expressed support for blocking any future Trump Federal Reserve nominations in response to the investigation.[121] Republican SenatorsKevin Cramer,John Kennedy, andDave McCormick expressed skepticism that Powell was guilty of criminal activity, whileHouse Financial Services Committee ChairFrench Hill and Republican SenatorRoger Marshall criticized the investigation as a distraction.[122][123] However, Cramer later suggested that Powell should resign to have the investigation dropped and prevent an indictment.[124]
Senate Banking Committee ChairTim Scott initially provided no comment when asked about the investigation by reporters; Scott presided over the Senate Banking Committee meeting where Powell provided testimony that has become the subject of the perjury investigation.[125] Scott subsequently said that he does not believe Powell perjured himself during his testimony.[126] Senate Majority LeaderJohn Thune called for the investigation to be resolved quickly, for it to not interfere with the Federal Reserve's independence, and asserted that the allegations against Powell "better be real and they better be serious" or otherwise more senators may likewise support blocking future Trump Federal Reserve nominations.[127] Speaker of the HouseMike Johnson rejected assertions that the Justice Department was being weaponized in conducting the investigation, expressed no opinion about the allegations, and downplayed concerns that the investigation would undermine the Federal Reserve's independence.[128][129] Senate Minority LeaderChuck Schumer criticized the investigation for undermining the Federal Reserve's independence and suggested that the investigation was being done to make Powell a scapegoat for public disapproval of Trump's handling of the U.S. economy and the administration'strade policies.[130]
After Trump announced that he would nominate Warsh to replace Powell on January 30,[131][132] Tillis stated that he will oppose Warsh's nomination until the investigation into Powell is "fully and transparently resolved."[133][134] Since the Senate Banking Committee's composition currently includes 13Republicans and 11Democrats, Tillis has the ability to block the committee from voting to advance Warsh's nomination to a full Senate confirmation vote.[135] John Thune has said that Warsh will "probably not" be confirmed without support from Tillis.[135][132] On February 4, Tillis, who isnot seeking reelection in 2026, subsequently said that he will block Warsh's nomination for the remainder of the119th United States Congress if the investigation continues until his term expires in January 2027,[136] while the day before, Senate Democrats sitting on the Banking Committee called for a delay to the nomination until both the Powell investigation and theinvestigation of Lisa Cook were both ended.[137] Tillis stated the previous September that he would not consider any replacement for Cook until the litigation was resolved.[138][139]
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