Federal Reserve Chair Jerome Powell Faces Unprecedented Criminal Investigation Over Headquarters Renovation Testimony
In a dramatic escalation of tensions between the Trump administration and the U.S. central bank, federal prosecutors have launched a criminal investigation into Federal Reserve Chair Jerome “Jay” Powell. The probe, disclosed on January 11-12, 2026, centers on whether Powell made false statements or lied to Congress during his testimony in June 2025 about the Federal Reserve’s massive $2.5 billion renovation of its historic headquarters buildings in Washington, D.C.
The U.S. Attorney’s Office for the District of Columbia—led by Trump appointee Jeanine Pirro, a former prosecutor and Fox News host—approved the inquiry in November 2025. Prosecutors are examining Powell’s public statements to lawmakers, along with related spending records, for potential violations including perjury or misleading federal officials. The Department of Justice served grand jury subpoenas to the Federal Reserve on Friday, January 9, 2026, with warnings of a possible criminal indictment.
Powell addressed the matter head-on in a rare video statement released Sunday evening, describing the investigation as “unprecedented” and politically motivated. He insisted that the allegations regarding his testimony were mere pretexts, emphasizing that the Fed had fully informed Congress through testimony and public disclosures about the renovation project.
“This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings,” Powell stated. “It is not about Congress’s oversight role… Those are pretexts. 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.”
The renovation of the Eccles Building and the 1951 Constitution Avenue structure— the first major overhaul since their construction in the 1930s—has long been a point of contention. Costs have ballooned due to unforeseen increases, though the Fed maintains the project will ultimately reduce long-term expenses by consolidating operations. Critics, including Trump allies, have accused the Fed of mismanagement and luxury spending, with claims of features like special elevators or rooftop gardens that Powell refuted in his congressional appearance.
The investigation emerges amid a prolonged and bitter conflict between President Donald Trump and Powell. Trump, who first nominated Powell as Fed chair in 2017 but has since repeatedly criticized him, has blamed high interest rates for economic challenges and demanded aggressive rate cuts. He has threatened to fire Powell (despite legal limits on removing a Fed chair) and even mused about suing him for “incompetence” related to the renovation.
Powell, whose term as chair expires in May 2026 but who could remain a Fed governor until 2028, framed the probe as an attack on the central bank’s independence. He warned that it raised fundamental questions about whether monetary policy would be driven by economic evidence or political pressure and intimidation.
The move drew swift and sharp condemnation from former Fed leaders. In a joint statement, living ex-chairs Alan Greenspan, Ben Bernanke, and Janet Yellen—along with other former senior officials—denounced the inquiry as an “unprecedented attempt to use prosecutorial attacks to undermine [Fed] independence.” They likened it to tactics seen in emerging markets with weaker institutions, warning of negative consequences for inflation and economic stability.
Markets reacted with unease on January 12, 2026: the U.S. dollar weakened, gold prices rose as a safe-haven asset, and Wall Street opened lower amid broader concerns about eroded central bank autonomy.
The Department of Justice has declined to comment on the specifics of the ongoing investigation, though a spokesperson highlighted a priority on probing “abuse of taxpayer dollars.” President Trump denied direct involvement, telling interviewers he knew nothing about the probe while reiterating his frustration with Powell’s handling of interest rates.
What began as criticism of a building project has evolved into a high-stakes clash over the Federal Reserve’s role in the U.S. economy. As the investigation unfolds, it underscores the fragile balance between political influence and institutional independence at the heart of American monetary policy.
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