Federal Reserve Chair Jerome Powell revealed Sunday that the Justice Department subpoenaed the central bank Friday and threatened a criminal indictment, escalating a year-long pressure campaign from the Trump administration.
At a Glance
- The DOJ subpoena relates to Powell’s June Senate testimony on Fed building renovations
- Powell calls the threatened indictment an attempt to influence interest-rate decisions
- He vows to stay in office despite Trump’s repeated calls for his resignation
- Why it matters: The clash tests Fed independence as markets watch for political interference in monetary policy
The subpoena centers on Powell’s statements to the Senate about the renovation of Federal Reserve office buildings. “No one – certainly not the chair of the Federal Reserve – is above the law,” Powell said. “But this unprecedented action should be seen in the broader context of the administration’s threats and ongoing pressure.”
Powell told News Of Fort Worth that the administration’s move is the latest attempt to control Fed policy. “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,” he said.
He labeled the renovation issue a “pretext,” asserting that “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.”
Despite the legal threat, Powell said he will not resign. “I will continue to do the job the Senate confirmed me to do, with integrity and a commitment to serving the American people,” he stated.
Top White House officials have previously accused Powell of mismanaging the Fed headquarters renovation, suggesting he misled Congress about the project’s scope and cost overruns. Over the summer the central bank brought in its inspector general to review the expansion, a move Powell ordered after President Trump criticized the spending.
The White House, the Justice Department, and the office of U.S. Attorney Jeannine Pirro did not respond to News Of Fort Worth‘s requests for comment.
Markets showed little immediate reaction to Powell’s statement, though the U.S. dollar slipped 0.3% against a basket of currencies in early evening trading.
Trump has publicly attacked Powell for months, arguing the Fed has been too slow to cut interest rates. In a New York Times interview last week the president said he had already chosen a successor to replace Powell when his term ends in May.
Separately, the Justice Department is investigating mortgage-fraud allegations against Fed Governor Lisa Cook, who has denied any wrongdoing, according to filings from her legal team this week.
Timeline of Key Events
| Date | Event |
|---|---|
| Last Friday | DOJ subpoenas Fed and threatens indictment |
| Sunday | Powell issues public statement |
| Over the summer | Fed inspector general begins renovation review |
| Last week | Trump tells NYT he has picked Powell’s replacement |
Fed Independence Under Scrutiny
Powell’s statement underscores rising tension between the central bank and the White House. The Fed’s ability to set rates free from political influence is a cornerstone of U.S. economic policy. By tying the subpoena to rate decisions, Powell frames the dispute as a test of that independence.
Administration officials have not outlined specific criminal statutes they believe Powell violated. The chair’s June testimony covered details of the headquarters renovation, a project whose costs have risen over time. Powell has said the plans evolved as scope changed, and he ordered an internal review after Trump’s criticism.
The president’s public dissatisfaction with Powell dates back months. Trump appointed Powell during his first term but has since blamed him for keeping borrowing costs elevated. Markets have reacted nervously at times to the prospect of a leadership change at the Fed, though investors showed muted response Sunday night.
Key Takeaways
- The DOJ subpoena marks an escalation in the administration’s feud with the Fed chair
- Powell insists the renovation issue is cover for pressuring rate policy
- He pledges to serve out his term despite Trump’s push for his exit
- Markets so far appear to treat the clash as political theater rather than a policy shift
Derrick M. Collins reported this story for News Of Fort Worth.
