The DOJ has opened a criminal inquiry into Fed Chair Jerome Powell over roughly $2.5 billion in renovations to the Fed’s Washington headquarters. Approved by U.S. Attorney Jeanine Pirro, the probe examines alleged false statements to Congress and permit irregularities, though the Fed has publicly explained the overruns. The investigation’s timing — just before an FOMC meeting and as Powell’s chair term nears its end — has stirred bipartisan concern that it could undermine Fed independence and rattle markets. The case is early-stage and may fizzle, but even that prospect carries institutional and economic consequences.
Why the DOJ’s Inquiry Into Jerome Powell Is Puzzling — and Risky for Fed Independence
Why the timing of the DOJ’s Jerome Powell investigation is so baffling
The Justice Department’s criminal inquiry into Federal Reserve Chair Jerome Powell — disclosed by Powell in a video statement — is both unprecedented and puzzling in its timing. The probe centers on renovations to the Fed’s Washington headquarters, a project that has grown to roughly $2.5 billion, but critics say the investigation appears politically charged and could threaten the independence of U.S. monetary policy.
What the Investigation Examines
Federal prosecutors are reportedly reviewing whether Powell misled Congress about the scope of the renovation project or failed to obtain required permits, according to reporting from The Wall Street Journal. The Fed has publicly explained cost overruns and removed criticized elements of an earlier plan, and there’s no clear financial benefit identified for Powell personally.
Political Context And Who Approved The Probe
The inquiry was approved in November by U.S. Attorney for the District of Columbia Jeanine Pirro, a well-known ally of President Trump. Pirro’s appointment and partisan past have prompted concerns that the investigation could be a politically motivated effort to pressure the Fed rather than a straightforward criminal probe.
When asked about the inquiry on NBC News, President Trump denied direct involvement but renewed his criticisms of Powell: "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."
Timing And Potential Consequences
The timing is notably fraught. Grand-jury subpoenas arrived about two weeks before the next Federal Open Market Committee (FOMC) meeting on interest rates. Powell helped guide the committee through three rate cuts last year; market analysts say the investigation could impede future easing. For example, some JPMorgan analysts now expect the Fed to remain on hold through 2026, a forecast at odds with the president’s push for lower rates.
Powell’s four-year term as chair expires in May. Although it’s unlikely President Trump would reappoint him, Powell would still have two years left as a Fed Board governor. Previously he might have resigned at the end of his chairmanship, but the investigation complicates that decision because resignation would create another vacancy for the president to fill.
Legal Backdrop And Broader Stakes
The probe also arrives while the Supreme Court prepares to hear a case involving Fed Governor Lisa Cook, whom the president attempted to remove last year. Historically, the Court has been protective of the Fed’s independence; heightened scrutiny of presidential pressure campaigns could influence how justices view efforts to erode that autonomy.
So far, the matter remains in its early stages. The administration has failed to secure indictments in several other high-profile pursuits, and it is possible this inquiry will produce no charges. But even the prospect of a criminal case against the nation’s central banker has rattled markets and drawn bipartisan criticism on Capitol Hill.
Possible Outcomes
At worst, an indictment of the Fed chair could provoke widespread economic anxiety and claims of a politicized central bank, risking domestic and global market turmoil. At best, the probe fizzles or is dropped, leaving political fallout for the Department of Justice and its leadership. Either outcome risks damaging public confidence in key institutions.
Bottom line: The investigation may be legally thin and politically motivated, but its timing and symbolism create real risks for Fed independence and market stability.
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