The BareStory
Federal Reserve Chair Jerome Powell confirmed on Sunday that the Department of Justice has initiated a criminal investigation concerning his past statements to Congress. The probe focuses on testimony Powell provided to the Senate Banking Committee in June 2025 regarding a multi-billion dollar renovation of the central bank’s headquarters in Washington, D.C. In a video statement, Powell characterized the investigation as a politically driven attempt to compromise the Federal Reserve's independence and stated he would not resign before his term ends in May unless a legal violation is found.
On Monday, a group of prominent former economic officials released a joint statement condemning the inquiry. The signatories—including former Federal Reserve Chairs Janet Yellen, Ben Bernanke, and Alan Greenspan, as well as former Treasury Secretaries Timothy Geithner, Jacob Lew, Henry Paulson, and Robert Rubin—argued that "prosecutorial attacks" threaten the central bank's ability to manage the economy objectively. They asserted that maintaining the Fed's autonomy is essential for controlling inflation and ensuring economic stability, warning that political interference is characteristic of nations with weak institutions.
The White House referred questions to the Justice Department, which has not provided immediate comment. President Donald Trump, who appointed Powell in 2017, has frequently criticized the Fed Chair regarding both the renovation costs and the bank's interest rate policies. Powell alleged the investigation is a pretext for removal resulting from the Fed's refusal to align monetary policy with presidential preferences.
The investigation has sparked division among lawmakers. While some Republicans questioned the project's costs, others expressed alarm regarding the separation of powers. Senator Thom Tillis announced he would block the confirmation of any future Federal Reserve nominees until the investigation is resolved, questioning the Justice Department's credibility. Senator Lisa Murkowski described the probe as an "attempt at coercion," while House Financial Services Chair French Hill called it an unnecessary distraction.
How it may affect me
As a U.S. reader:
Former economic officials warn that threats to the Federal Reserve's autonomy could undermine its ability to control inflation and maintain economic stability for the nation.
Senator Thom Tillis has vowed to block future Federal Reserve nominees, potentially causing vacancies that could stall the central bank's administrative and policy functions.
Disputes over the Fed's refusal to align monetary policy with presidential preferences may introduce uncertainty regarding how interest rates and economic strategies are managed.
Intense scrutiny regarding the multi-billion dollar headquarters renovation could lead to stricter oversight of central bank spending and resource allocation.
