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Justice Department Launches Criminal Probe into Fed Chair Powell, Sparking Independence Concerns

2026-01-13

The BareStory

The United States Department of Justice has initiated a criminal investigation into Federal Reserve Chairman Jerome Powell involving grand jury subpoenas. The probe reportedly focuses on cost overruns associated with a multibillion-dollar renovation of the Federal Reserve’s headquarters and allegations of perjury regarding Powell's past congressional testimony. U.S. Attorney Jeanine Pirro stated that her office is pursuing the matter on its merits, claiming the Federal Reserve ignored multiple attempts to discuss the budget discrepancies.

President Trump, who described Powell on Tuesday as "incompetent" or "crooked," told reporters that the subpoenas were related to the budget issues and not his administration's views on interest rates. The White House subsequently issued a statement asserting that the President did not direct the Department of Justice to launch the inquiry. However, in a video statement, Powell alleged that prosecutors had threatened a criminal indictment based on his Senate testimony. He explicitly linked the investigation to the administration's pressure on the central bank to lower interest rates.

The investigation has triggered bipartisan criticism and anxiety regarding the traditional independence of the Federal Reserve. Democratic Senator Elizabeth Warren criticized the move, while Republican Senate Majority Leader John Thune called for the matter to be "resolved quickly." Senator Thom Tillis indicated he would oppose any nominee to replace Powell until the probe is concluded. Business leaders also expressed concern, with JPMorgan Chase CEO Jamie Dimon warning that undermining the Fed’s autonomy could lead to higher inflation and interest rates. Treasury Secretary Scott Bessent reportedly advised the President that the investigation could complicate the confirmation process for the next chair when Powell's term expires in May.

Left Perspective

  • The investigation focuses on alleged financial mismanagement and perjury
  • Prosecutors cite a lack of cooperation from the Federal Reserve
  • Officials deny that the inquiry is related to monetary policy

Right Perspective

  • Powell alleges the probe is politically motivated retaliation
  • Business leaders warn of economic risks if autonomy is undermined
  • Lawmakers and officials fear legislative hurdles and institutional damage

How it may affect me

As a U.S. reader: You may face economic risks, as JPMorgan Chase CEO Jamie Dimon warned that undermining the Federal Reserve's autonomy could lead to higher inflation and interest rates.

The appointment of the next Federal Reserve chair could be stalled, as Senator Thom Tillis indicated he would oppose any nominee until the investigation is resolved.

Taxpayer-funded projects are under review, as the Department of Justice investigates multibillion-dollar cost overruns associated with the renovation of the Federal Reserve’s headquarters.

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