Powell Says DOJ Subpoenas Threaten Federal Reserve Independence
WASHINGTON — The U.S. Department of Justice has served grand jury subpoenas on the Federal Reserve, escalating a criminal investigation tied to testimony by Fed Chair Jerome Powell about the central bank’s headquarters renovation in Washington, D.C.
The subpoenas relate to Powell’s June 2025 testimony before the Senate Banking Committee, where he discussed a multi-year renovation project originally estimated at $1.9 billion that later grew to roughly $2.5 billion. Justice Department officials are examining whether Powell made false or misleading statements under oath regarding the scope and cost of the project.
In a rare video statement released Sunday on the Fed’s website and social media, Powell confirmed the subpoenas and forcefully rejected allegations of wrongdoing. He said the Federal Reserve “made every effort to keep Congress informed” and characterized the investigation as politically motivated retaliation for resisting pressure to cut interest rates.
“This is not about the renovation,” Powell said. “It is about whether the Federal Reserve will be able to continue to set interest rates based on evidence and economic conditions rather than political intimidation.”
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The investigation marks a sharp escalation in tensions between the Fed and the administration of Donald Trump, who has repeatedly criticized Powell for keeping interest rates higher than he prefers. Trump denied direct involvement in the probe but renewed his criticism of Powell’s leadership.
Lawmakers are divided. Some Republicans, including Rep. Anna Paulina Luna of Florida, argue the subpoenas represent legitimate oversight of government spending. Others warn the move threatens the independence of both the Justice Department and the central bank.
Financial markets reacted cautiously, with stock futures slipping modestly following Powell’s remarks.
Powell’s term as Federal Reserve chair expires in May 2026, though he may remain on the Board of Governors until 2028. The investigation could influence upcoming debates over the Fed’s leadership and independence as it continues to navigate inflation and monetary policy decisions.
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