Criminal Investigation Against Jerome Powell (2026)

Criminal Investigation Against Jerome Powell (2026) is a federal criminal inquiry initiated by the United States Department of Justice (DOJ) against Jerome H. Powell, Chairman of the Federal Reserve. The investigation was launched following allegations concerning the accuracy of statements Powell made before the Senate Banking Committee in June 2025 regarding the Federal Reserve’s $2.5 billion headquarters renovation project.

In a statement on January 11 2026, Powell announced that the Department of Justice had issued a grand jury subpoena to the Federal Reserve and stated that this action must be understood in the context of “administrative threats and sustained pressure.” The investigation occurred during a period of heightened tension between the Trump administration and the Federal Reserve over interest rate policy and has reignited debates in the United States over central bank independence. As of January 12 2026, the investigation remains ongoing with no formal indictment or criminal charge having been filed.

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On Friday January 9 2026, the United States Department of Justice (DOJ) issued a grand jury subpoena to the Federal Reserve. The subpoena was prepared in connection with statements made by Federal Reserve Chair Jerome Powell before the Senate Banking Committee in June 2025.

Federal prosecutors have begun examining whether Powell’s testimony contained “false or misleading information” regarding the Federal Reserve’s $2.5 billion renovation project for its headquarters in Washington D.C. The investigation is being conducted by the U.S. Attorney’s Office for the District of Columbia.

Media reports in the United States indicate that the investigation is directly based on the allegation that Powell “misled Congress”.

On January 11 2026, Powell announced that the Department of Justice had issued a grand jury subpoena to the Federal Reserve and that a criminal indictment was being threatened against him. Powell stated: “On Friday the Department of Justice issued a grand jury subpoena to the Federal Reserve, threatening a criminal indictment related to my testimony before the Senate Banking Committee last June.”

In his statement, Powell affirmed: “I have deep respect for the rule of law and accountability in our democracy. No one, including the Federal Reserve Chair, is above the law.”

Powell emphasized that the threat had nothing to do with his testimony or the renovation project, calling it “pretextual.” He stated: “This new threat has nothing to do with my testimony last June or with the renovation of Federal Reserve buildings. These are pretexts. The threat of criminal prosecution is a consequence of the Federal Reserve setting interest rates in the public interest rather than following the President’s preferences.”

In the same video message, Powell added: “This is about whether the Fed can continue to set interest rates based on evidence and economic conditions or whether monetary policy will be directed by political pressure or intimidation.”

In his remarks, Powell highlighted that he has served through four different presidencies: “I have served at the Federal Reserve under four administrations, both Republican and Democratic. In every case, I carried out my duties without political fear or favor and focused solely on our mandate of price stability and maximum employment. Public service sometimes requires standing firm against threats. I will continue to fulfill the role confirmed by the Senate with honesty and a commitment to serve the American people.”

The Federal Reserve headquarters renovation project includes comprehensive restoration of the Eccles Building and the structure at 1951 Constitution Avenue in Washington D.C. The project is described as the first large-scale renovation of these buildings, which were constructed in the 1930s.

Federal Reserve officials have stated that the goals of the renovation are “updating health and safety standards, removing asbestos and lead contaminants, and modernizing electrical and ventilation systems.”

The project’s cost was initially estimated at $2.5 billion, but the Trump administration has criticized this figure as “excessively high”. On December 30 2025, President Donald Trump stated: “This project’s cost will exceed $4 billion. It will become the most expensive construction per square meter in the world.”

In June 2025, Fed Chair Powell, during his semiannual monetary policy presentation to the Senate Banking Committee, addressed the scope of the project. In response to questions, Powell stated: “There is no new VIP dining room. No new marble. No private elevators. No new plumbing, beehives, or rooftop gardens,” emphasizing that the building was not being upgraded for luxury purposes.

On July 25 2025, President Donald Trump visited the Federal Reserve headquarters to inspect the renovation work and received briefings from Powell. Media coverage from the visit reported a disagreement between the two over the project’s cost.

After being re-elected president, Donald Trump repeatedly criticized Powell publicly for being “too late” in cutting interest rates. Trump referred to Powell as “Mr. Too Late”.

The Trump administration has argued that the Federal Reserve’s interest rate policy has slowed economic growth and has raised the possibility of removing Powell from office. It has been reported that Trump previously stated: “I would very much like to remove him.”

In the second half of 2025, the Fed lowered interest rates three times in succession, but the Trump administration maintained that rates remained too high. On August 25 2025, President Trump ordered the removal of Federal Reserve Board member Lisa Cook, accusing her of “mortgage fraud”. The legal challenge to Cook’s removal remains pending before the United States Supreme Court.

At the time the investigation began, it was reported that Powell’s term as Chair would end in May 2026, but his membership on the Federal Reserve Board would continue until January 2028.

It has been reported that the Trump administration has begun evaluating potential successors for Powell. Candidates under consideration include National Economic Council Director Kevin Hassett, former Fed Governor Kevin Warsh, and BlackRock Global Fixed Income manager Rick Rieder.

Following the announcement of the criminal investigation, members of both the Republican and Democratic parties issued statements. Republican Senator Thom Tillis criticized the Department of Justice’s decision to launch the inquiry, arguing that it undermines institutional independence. Tillis stated: “If anyone still doubts that advisors in the Trump administration are trying to end the Federal Reserve’s independence, they no longer should.”

Tillis further declared: “I will not confirm any appointment to the Fed—including the upcoming Fed Chair—until this legal process is fully concluded.”

Some Republican members of the House of Representatives have characterized the Department of Justice’s move as “a development that could undermine institutional trust.” According to Politico, one Republican representative said: “Will they recognize no limits in forcing their preferences on every issue? The administration is setting a standard even they cannot meet, and this will affect us for generations.”

Criticism has also emerged from the Democratic Party. Senate Minority Leader Chuck Schumer labeled the DOJ’s action as “executive interference,” while Democratic Senator Elizabeth Warren described the investigation as “an effort to eliminate the Fed’s independence.”

Some members of the Senate Banking Committee noted that the Department of Justice initiated the investigation at an “unusual time”. In response, calls have emerged in the Senate for a new review of the DOJ’s authority regarding judicial independence.

On January 12 2026, in an interview with NBC News, U.S. President Donald Trump stated he had no direct role in the Department of Justice’s investigation. Trump said: “I have no knowledge of this, but he is certainly not a good Chair of the Fed and he is not good at building buildings.” In the same interview, Trump added regarding Powell: “What he should be under pressure for is that interest rates are too high.”

In a December 2025 statement, Trump also indicated that his administration was considering filing an “incompetence lawsuit” against Powell, saying: “A lawsuit against Powell for incompetence is being considered.” White House officials declined to comment directly during press briefings, stating only that they could not interfere in an ongoing legal proceeding.

Following the public announcement of the investigation, “significant market volatility” occurred on January 11-12 2026. The U.S. dollar lost value against other currencies; the dollar index fell by 0.2 percent. The pound sterling rose approximately 0.5 cents to $1.3440 against the dollar.

On the same day, international markets saw the price of gold per ounce reach $4,600, its highest level ever recorded. U.S. equity futures declined. The S&P 500 index fell 0.75 percent, the Dow Jones Industrial Average dropped 0.65 percent, and the Nasdaq 100 index retreated 1 percent.

European stock markets also opened lower. London’s FTSE 100 index fell 18 points, France’s CAC index declined 0.2 percent, and Germany’s DAX index traded sideways. Hargreaves Lansdown senior analyst Matt Britzman described the situation as: “Global markets opened cautiously this morning as investors navigate new policy volatility and rising geopolitical risks.”

Economic analysts reported that the announcement of the DOJ’s investigation has heightened concerns about central bank independence. Goldman Sachs Chief Economist Jan Hatzius, speaking at the 2026 Goldman Sachs Global Strategy Conference, stated: “The threat of a criminal indictment against Federal Reserve Chair Jerome Powell has reinforced fears that central bank independence is being weakened.”

Hatzius added: “I have no doubt that Powell will continue to base his decisions during his remaining term solely on economic data and will not be influenced in any direction.”

University of Pennsylvania Fed historian Peter Conti-Brown characterized the situation as “a turning point in Trump’s presidency and a low point in the history of American central banking.” Brookings Institution senior fellow and former Fed Vice Chair Donald Kohn told Politico: “History shows us that when central bank independence is threatened, negative consequences follow.”