WASHINGTON — The Trump administration’s criminal investigation of Federal Reserve Chair Jerome Powell sparked backlash among lawmakers on Monday as some Republicans pushed back against what they said was an effort to exert control over the central bank, while Powell and outside economists defended Fed independence.
The investigation — described by the Associated Press as a first for a sitting Fed chair — appeared to embolden defenders of the U.S. central bank after Powell revealed Sunday that the Justice Department had issued subpoenas. The subpoenas were linked to statements Powell made to a congressional committee about the renovation of Fed buildings, including the marble-clad headquarters in Washington.
White House press secretary Karoline Leavitt said Trump did not direct his Justice Department to investigate Powell. Leavitt told reporters that “One thing for sure, the president’s made it quite clear, is Jerome Powell is bad at his job,” and added, “As for whether or not Jerome Powell is a criminal, that’s an answer the Department of Justice is going to have to find out.”
Powell and supporters framed the subpoenas as a pressure campaign. Sen. Lisa Murkowski, an R-Alaska, said in a statement on Monday that after speaking with Powell, “it’s clear the administration’s investigation is nothing more than an attempt at coercion.” Powell also said the Justice Department threatened criminal indictments over his June testimony to Congress about the cost and design elements of a $2.5 billion building renovation that includes the Fed’s headquarters.
The dispute played out as a question of how power is balanced inside the federal government, at a time when investors and households are focused on inflation and a slowing job market. Some Republican lawmakers and leading economists said the Trump administration had overstepped by sending subpoenas meant to influence the Fed’s actions, which defend their interest-rate decisions as based on economic data rather than political wishes.
Jeanine Pirro, the U.S. attorney for the District of Columbia, said on social media that the Fed “ignored” her office’s outreach to discuss the renovation cost overruns, “necessitating the use of legal process — which is not a threat.” Pirro also posted on X that “The word ‘indictment’ has come out of Mr. Powell’s mouth, no one else’s,” as debate continued over the risks embedded in the subpoenas and the White House’s statement about determining Powell’s criminality.
A bipartisan group of former Fed leaders and economists said the investigation was an attempt to undermine the Fed, warning that politicized central banks tend to deliver worse economic outcomes. Jason Furman, an economist at Harvard and a former adviser to President Barack Obama, said it was “ham-handed, counter-productive, and going to set back the president’s cause,” and warned that “the next Fed chair will be under more pressure to prove their independence.”
In the Senate, Republicans who vote on Trump’s eventual pick to replace Powell as chair also signaled concern about the administration’s move. Sen. Thom Tillis, R-North Carolina, said late Sunday that he would oppose any Trump Fed nominees until the investigation is “resolved.” Sen. Dave McCormick said, “I do not think Chairman Powell is guilty of criminal activity,” while Senate Majority Leader John Thune said he “haven’t seen the case” and added, “they better, they better be real and they better be serious.”
Powell is set to leave the chair role in May, but he has a separate term as a Fed governor until January 2028, which would allow him to remain on the seven-member board. Scott Alvarez, a former general counsel at the Fed, said the probe was intended to intimidate Powell into leaving the board, describing the investigation’s aim as making his life miserable unless he leaves in May. Kevin Hassett, director of the White House National Economic Council, said he was unaware of Powell’s plans to remain on the board, telling reporters, “I’ve not talked to Jay about that.”
The controversy also intersects with timing around Trump’s nomination process. The AP reported that Trump was teasing the likelihood of announcing a nominee this month to succeed Powell, and that the subpoenas and White House statements could complicate the confirmation path for a replacement. In a Dec. 29 news conference, Trump criticized Powell, saying, “He’s just a very incompetent man,” and added, “But we’re going to probably bring a lawsuit against him.”