DOJ subpoenas Federal Reserve, threatens Powell with criminal indictment

What the subpoenas concern

The subpoenas relate to Powell’s appearance before the Senate Banking Committee in June, at which the renovation of two Fed office buildings became a flashpoint. Senate Banking Committee Chairman Tim Scott, Republican of South Carolina, said at the hearing that the renovation included “rooftop terraces, custom elevators that open into VIP dining rooms, white marble finishes, and even a private art collection.”

Powell disputed those details, saying at the hearing that “there’s no new marble. … there are no special elevators” and that some of the controversial items are “not in the current plan.”

In July, Office of Management and Budget Director Russell Vought wrote to Powell that the testimony about changes to the building plans “raises serious questions about the project’s compliance” with previously approved plans.

Trump visited the building site later that same month. Standing next to Powell, Trump overstated the cost of the renovation, according to the Associated Press. Speaking to reporters afterward, Trump said, “they have to get it done” and added, “Look, there’s always Monday morning quarterbacks. I don’t want to be that. I want to help them get it finished.” When asked whether the renovation was a firing offense, Trump said, “I don’t want to put that in this category.”

Market reaction expected

The move is expected to rattle financial markets. Krishna Guha, an analyst at investment bank Evercore ISI, wrote in a client note Sunday that he expected “the dollar, bonds and stocks to all fall in Monday trading in a sell-America trade similar to that in April last year at the peak of the tariff shock and earlier threat to Powell’s position as Fed chair.”

“We are stunned by this deeply disturbing development which came out of the blue after a period in which tensions between Trump and the Fed seemed to be contained,” Guha added.

Trump says he didn’t know

Trump, in a brief interview with NBC News Sunday, said he did not know about the investigation into Powell. When asked whether the investigation was intended to pressure Powell on rates, Trump said, “No. I wouldn’t even think of doing it that way.”

The Justice Department said in a statement that it cannot comment on any particular case, but added that Attorney General Pam Bondi “has instructed her US Attorneys to prioritize investigating any abuse of tax payer dollars.” Timothy Lauer, a spokesperson for U.S. Attorney Jeanine Pirro’s office, said the office does not comment on ongoing investigations.

Republican opposition

The potential indictment drew immediate pushback from at least one Republican senator. Sen. Thom Tillis of North Carolina, who sits on the Banking Committee that oversees Fed nominations, said he would oppose any future Fed nominee until “this legal matter is fully resolved.”

“If there were any remaining doubt whether advisers within the Trump Administration are actively pushing to end the independence of the Federal Reserve, there should now be none,” Tillis said. “It is now the independence and credibility of the Department of Justice that are in question.”

Broader context

Powell’s term as Fed chair ends in May 2026. Trump administration officials have signaled that the president could name a potential replacement this month.

The subpoena action is the latest in a series of moves against the Fed under Trump. The administration has also sought to fire Fed governor Lisa Cook, an unprecedented step. Cook sued to keep her job, and courts have ruled she may remain in her seat while the litigation proceeds. The Supreme Court will hear arguments in that case Jan. 21.

Powell became the latest perceived administration adversary to face a criminal investigation by Trump’s Justice Department. Trump has publicly urged prosecutions of political opponents, a departure from the longstanding convention that the department makes investigative and prosecutorial decisions independent of the White House.

The subpoenas also unwind what had been a period of relative accommodation between the Fed and the administration. The central bank had dialed back some policies — including efforts to consider climate change’s impact on the banking system — that the administration opposed. Sunday’s video statement from Powell marked a full-throated reversal of that approach.