Bipartisan former Fed and Treasury chiefs slam DOJ probe of Powell as threat to central-bank independence
A DOJ criminal investigation into Federal Reserve Chair Jerome Powell over testimony about a $2.5 billion headquarters renovation has provoked bipartisan condemnation from former Fed and Treasury chiefs, who warn the probe threatens central-bank independence amid intense political pressure.
- DOJ probe examines whether Powell lied under oath about a $2.5 billion Federal Reserve renovation project — Powell denies wrongdoing.
- Bipartisan defense: Former Fed chairs and ex-Treasury secretaries called the investigation an unprecedented assault on independence.
- Political stakes: Critics warn the probe could be used to pressure the Fed on interest rates; supporters argue accountability for taxpayer funds matters.
- Key documents: Grand jury subpoenas were served to the Fed; public statements and congressional referrals drive the scrutiny.
What the DOJ probe is examining
The Justice Department has opened a criminal investigation into whether Fed Chair Jerome Powell made false statements when he testified to the Senate Banking Committee in June about the scope and cost of a major renovation of Federal Reserve buildings. According to reporting, prosecutors obtained grand-jury subpoenas that were served to the Fed and its staff, focusing on Powell’s testimony that certain previously reported features were no longer part of the project budget.
Source reporting: ABC News (Politics)
Powell’s reply and allegations of political motive
In a rare video address after subpoenas were revealed, Powell denied any criminal conduct and said cost increases reflected unforeseen factors while the project remains intended to consolidate operations and reduce long-term spending. He accused the Justice Department of using the probe as a political tool to pressure the Fed into cutting interest rates, naming officials he said were involved in a pattern of threats.
Powell said the investigation was a pretext to influence monetary policy and that he had not lied under oath.
See Powell’s remarks: Federal Reserve statement and speech
Details on the Federal Reserve renovation dispute
Reporting shows the renovation began as modernization and consolidation. Early proposals included rooftop access, water features, private elevators and dining rooms for senior staff. Powell told senators in June many of those elements had been removed from final plans. The House referral by Rep. Anna Paulina Luna in July argued there may have been false statements about amenities and costs tied to the renovation. The Fed maintains the work will save money over time despite higher near-term costs.
Reporting source: ABC News (Business)
Who defended Powell — and why it matters
A bipartisan group of former officials — including ex-Fed chairs Alan Greenspan, Ben Bernanke and Janet Yellen, and former Treasury secretaries Timothy Geithner and Henry Paulson — issued a joint statement calling the probe an unprecedented assault on central-bank independence. Several former chairs of the Council of Economic Advisers who served under both parties also joined, warning that criminal inquiries used to influence monetary policy create a dangerous precedent.
“Using criminal investigations to influence monetary policy sets a dangerous precedent,” the joint statement said.
Read the joint reaction: ABC News (Business)
Reactions from the Trump administration and Congress
President Trump downplayed detailed knowledge of the probe while criticizing Powell’s rate decisions and renovation management. The White House reiterated the president’s right to criticize Fed decisions while asserting support for independence. The Attorney General’s office emphasized investigations into potential taxpayer-dollar abuse and said no one is above the law.
Capitol Hill has shown rare bipartisan alarm. Some Senate Republicans, including Sen. Thom Tillis (R-N.C.), called the probe an attack on Fed independence and warned they might block future Fed nominees. Sen. Lisa Murkowski urged Congress to investigate the DOJ’s actions, while Sen. Elizabeth Warren accused the administration of misusing the DOJ to control monetary policy. Senate leadership has demanded transparency and evidence.
Coverage of Senate reaction: Fox Business reporting
Legal and political stakes
Legal question: Whether Powell knowingly made false statements under oath — a potential criminal offense — or whether his testimony reflected honest judgment about complex accounting.
Political risk: The probe could erode the barrier between law enforcement and monetary policy, enabling administrations to use the DOJ to influence interest-rate decisions. Supporters of the probe argue public officials must be accountable for misuse of taxpayer funds and misleading testimony.
Timeline and context
Key milestones:
- July: President Trump visited the renovation site with Powell; Trump later criticized cost estimates.
- July: House referral by Rep. Anna Paulina Luna prompted additional scrutiny.
- January: Grand-jury subpoenas were served to the Fed, prompting Powell’s video statement announcing the investigation.
Sources: ABC News (Politics) and ABC News (Business)
Implications for the world
Economic impact: Markets watch the Fed for global rate signals; any weakening of Fed independence or forced rate cuts could lower global borrowing costs and weaken the dollar, affecting trade, capital flows and inflation.
Political consequences: The episode could reshape norms on separation between law enforcement and central banking; other governments might follow suit, increasing political interference.
Social effects & practical takeaways: Changes in interest rates affect jobs, mortgages and savings. Travelers, exporters, savers and borrowers should monitor developments that could influence rates and exchange rates.
Reporting notes and sources
This account relies on reporting by major outlets and statements posted by the Fed. Key sources include: ABC News (Politics), ABC News (Business), Powell’s public remarks on the Federal Reserve site, and Senate reaction reporting at Fox Business reporting.
