Federal prosecutors have opened a criminal investigation into Federal Reserve Chair Jerome Powell, examining whether he misled Congress about the scope and cost of the central bank’s $2.5 billion headquarters renovation. The dramatic escalation marks a new chapter in President Donald Trump’s long-running feud with the nation’s top monetary official.
The probe, led by the U.S. attorney’s office for the District of Columbia, centers on Powell’s June 2025 testimony before the Senate Banking Committee, where he characterized the massive renovation project as a necessary infrastructure overhaul rather than a luxury upgrade.
Testimony Under Scrutiny
During his appearance before lawmakers last summer, Powell emphatically denied that the renovation included extravagant features. “There’s no new marble. There are no special elevators. They’re old elevators that have been there. There are no new water features. There are no beehives, and there’s no roof garden terraces,” he stated under oath.
Powell told senators he undertook the renovation reluctantly but deemed it necessary because the historic Eccles Building was in poor condition. “We decided to take it on because, honestly, when I was the administrative governor, before I became chair, I came to understand how badly the Eccles Building really needed a serious renovation,” Powell explained, adding that the building was “not really safe” and not waterproof.
The multi-year project, which covers the Fed’s two main Foggy Bottom office buildings, is expected to be completed in fall 2027, with staff scheduled to return by March 2028. Unlike many government projects, the renovation isn’t funded through congressional appropriations but through the Fed’s self-generated income from interest on government securities and fees charged to financial institutions.
Powell Pushes Back
In an extraordinary public response, Powell confirmed Friday that the Department of Justice had served the Federal Reserve with grand jury subpoenas “threatening a criminal indictment related to my testimony before the Senate Banking Committee last June.”
Why would prosecutors target the Fed chair over building renovations? Powell sees a more sinister motive at play.
“I have deep respect for the rule of law and for accountability in our democracy. No one—certainly not the chair of the Federal Reserve—is above the law,” Powell declared in a statement. “But this unprecedented action should be seen in the broader context of the administration’s threats and ongoing pressure.”
The Fed chair didn’t mince words about what he believes is really happening: “Those are pretexts. 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, who has served under four administrations from both parties, framed the investigation as an attack on the Fed’s independence. “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 warned.
Trump’s Long-Running Fed Feud
The criminal probe represents a significant escalation in Trump’s contentious relationship with Powell. The president has repeatedly criticized the Fed chair over interest rate policy and has previously threatened legal action specifically regarding the renovation project.
A spokesperson for Attorney General Pam Bondi offered a different perspective, saying the DOJ is simply doing its job. “The Attorney General has instructed her U.S. Attorneys to prioritize investigating any abuse of taxpayer dollars,” the spokesperson told reporters.
That framing, however, appears at odds with the Fed’s financial structure. The central bank doesn’t receive taxpayer funding through the usual congressional appropriations process, instead generating its own operating budget through its financial activities.
The investigation puts Powell in an unprecedented position. No sitting Fed chair has ever faced criminal charges, and the move raises profound questions about the relationship between the White House and what has traditionally been an independent economic institution.
For now, Powell remains defiant. “In every case, I have carried out my duties without political fear or favor, focused solely on our mandate of price stability and maximum employment,” he said, signaling that even under the shadow of a criminal investigation, the nation’s central banker isn’t backing down.
