WASHINGTON — In an unprecedented escalation of tensions between the executive branch and the nation’s central bank, the Department of Justice has officially launched a criminal investigation into Federal Reserve Chair Jerome H. Powell. The probe, confirmed by the Federal Reserve on Sunday, January 11, 2026, centers on allegations that Powell may have misled Congress regarding a massive, multi-billion-dollar renovation of the Fed’s Washington, D.C. headquarters.
The investigation marks the culmination of a months-long feud between the Trump administration and the Federal Reserve. Sources close to the matter indicate that the U.S. Attorney’s Office for the District of Columbia is specifically examining whether Powell committed perjury or made false statements during his June 2025 testimony before the Senate Banking Committee.
Pretext or Perjury?
At the heart of the legal dispute is the $2.5 billion renovation of the Eccles Building and other Federal Reserve facilities. During his 2025 testimony, Powell denied the inclusion of “luxury” features in the project, such as VIP dining rooms, premium marble, and roof terrace gardens. However, recent referrals to the DOJ from lawmakers, including Representative Anna Paulina Luna (R-Fla.), allege that official project documents submitted to the National Capital Planning Commission directly contradict those claims.
In a defiant video statement released Sunday evening, Chair Powell characterized the investigation as a “pretext” designed to compromise the Federal Reserve’s ability to set monetary policy without political interference.
“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 said. “This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions—or whether instead monetary policy will be directed by political pressure or intimidation.”
A Widening Rift
The Department of Justice, now under the leadership of Attorney General Pam Bondi, and the D.C. U.S. Attorney’s office, led by Jeanine Pirro, have reportedly sought a wide array of documents and communications from Powell’s staff. The issuance of grand jury subpoenas suggests that prosecutors are moving toward a potential indictment, a move that would be historic and likely trigger a constitutional crisis regarding the “for cause” removal of a Federal Reserve Chair.
The White House has long been vocal in its criticism of Powell, with President Trump frequently attacking the Chair for maintaining higher interest rates than the administration desires. While the President has previously expressed interest in firing Powell, the law protects Federal Reserve governors from removal except “for cause,” a legal standard that typically requires proof of inefficiency, neglect of duty, or malfeasance in office. A criminal indictment related to congressional testimony could provide the legal “cause” the administration needs to force Powell out before his term ends in May 2026.
Market Reaction
Financial markets reacted sharply to the news of the subpoenas. The U.S. dollar weakened against major currencies, while gold prices surged to record highs as investors weighed the risks of a politically compromised central bank.
Critics of the administration argue that using the DOJ to investigate the Fed Chair sets a dangerous precedent. “This appears to be an attempt to build a case for mismanagement to bypass the independence of the Fed,” said one financial analyst. Conversely, supporters of the probe argue that no government official, including the head of the central bank, should be immune from scrutiny regarding the use of taxpayer funds.
As of Sunday night, the Department of Justice has not issued a formal comment on the pending litigation. Chair Powell has indicated he intends to remain in his post and contest any charges, setting the stage for a monumental legal battle over the future of American economic governance.
News Sources and Links
- The Washington Post: Trump’s Justice Department launches a criminal investigation of Fed chair
- Bloomberg Government: Prosecutors Open Criminal Probe Into Fed’s Powell, NYT Says
- Bloomberg Government: Powell Says Justice Department Served Fed With Subpoenas
- Associated Press (via Las Vegas Sun): DOJ subpoenas Federal Reserve, says its chairman
- Investing.com: Fed’s Powell referred to DOJ for potential criminal investigation
- Official House.gov Press Release: Rep. Anna Paulina Luna Refers Jerome Powell for Criminal Investigation
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