Federal Reserve Chairman Jerome Powell disclosed on Sunday that the central bank has received grand jury subpoenas from the U.S. Justice Department, characterizing the action as an unprecedented escalation of presidential pressure on monetary policy independence. The subpoenas, delivered Friday, threatened criminal indictment related to Powell’s June Senate testimony concerning substantial cost overruns in the Federal Reserve’s headquarters renovation project.
Powell dismissed the legal threats as ‘pretexts’ and directly linked them to the Fed’s interest rate decisions. ‘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, adding that ‘this unprecedented action should be seen in the broader context of the administration’s threats and ongoing pressure.’
The revelation comes amid persistent criticism from President Trump, who has repeatedly demanded faster interest rate cuts despite the Fed’s traditional independence. Trump denied knowledge of the Justice Department’s investigation, telling NBC, ‘I don’t know anything about it, but he’s certainly not very good at the Fed, and he’s not very good at building buildings.’
The headquarters renovation has become a focal point of contention, with costs ballooning by $600 million from an initial $1.9 billion estimate. Security enhancements including blast-resistant windows and structural reinforcements against explosions have contributed significantly to the overruns. During an unusual July visit to the construction site, Trump and Powell openly argued about the project’s escalating costs.
Lawmakers from both parties condemned the Justice Department’s action. Republican Senator Thom Tillis warned that ‘the independence and credibility of the Department of Justice are now in question,’ pledging to block confirmation of any Fed nominees until the matter is resolved. Democratic Senator Elizabeth Warren accused Trump of attempting ‘to complete his corrupt takeover’ of the central bank by potentially replacing Powell with a ‘sock puppet.’
With Powell’s term ending in May, Trump has indicated he would evaluate potential successors based on their willingness to implement immediate rate cuts, further challenging the institution’s nonpartisan tradition of serving under both Democratic and Republican administrations.