In a surprising development shaking up U.S. economic and political circles, President Donald Trump has denied any involvement in a Justice Department investigation targeting the Federal Reserve and its chair, Jerome Powell. The probe, which involves grand jury subpoenas issued on Friday, January 9, 2026, focuses on Powell’s testimony to Congress last June about a major renovation project at the Fed’s headquarters buildings.
The Federal Reserve, the independent central bank responsible for setting U.S. monetary policy, is undergoing a long-term renovation of two historic office buildings in Washington, D.C. The project, originally estimated lower, has now reached about $2.5 billion, drawing criticism from Trump and some allies over alleged cost overruns and mismanagement.
Trump, who appointed Powell as Fed chair in 2017 during his first term, has repeatedly criticized Powell for not cutting interest rates aggressively enough. Trump has argued that high rates hurt the economy and everyday Americans, even calling Powell names like “numbskull” in the past and threatening legal action over the renovation costs. In late December 2025, at his Mar-a-Lago resort, Trump suggested he might sue Powell for “incompetence” related to the building project, claiming costs could exceed $4 billion.
On Sunday night, January 11, 2026, Powell released a rare video statement confirming the subpoenas and the threat of possible criminal indictment tied to his Senate testimony. He stressed his respect for the rule of law, saying no one—including himself—is above it. However, he described the action as “unprecedented” and argued it was a pretext. Powell linked it directly to the administration’s “threats and ongoing pressure” to influence the Fed’s decisions on interest rates. He insisted the Fed sets rates based on what best serves the public, not presidential preferences.
In a brief interview with NBC News that same evening, Trump pushed back strongly. “I don’t know anything about it,” he said when asked about the DOJ’s subpoenas. He quickly pivoted to criticizing Powell again: “but he’s certainly not very good at the Fed, and he’s not very good at building buildings.” Trump denied any connection between the investigation and interest rates, saying, “No. I wouldn’t even think of doing it that way. What should pressure him is the fact that rates are far too high. That’s the only pressure he’s got.” He added that Powell has “hurt a lot of people” and that the public is the real source of pressure.
The Justice Department has not commented on specifics of the ongoing investigation. A spokesperson noted that Attorney General Pam Bondi has directed U.S. attorneys to prioritize cases involving potential abuse of taxpayer dollars—though the Fed is not funded by taxes; it operates on fees from services, loans to banks, and income from its investment portfolio.
The move has sparked bipartisan backlash in Congress. Republican Sen. Thom Tillis of North Carolina, a member of the Senate Banking Committee, declared he will oppose confirmation of any Trump nominees to the Fed—including a future chair—until the matter is resolved. He warned that it raises serious questions about efforts to undermine the Fed’s independence. Democratic Sen. Elizabeth Warren of Massachusetts called it an abuse of DOJ power, accusing Trump of acting “like a wannabe dictator” to make the Fed serve his interests and those of his wealthy allies. She also urged blocking any Fed nominees.
Powell’s term as chair ends in May 2026, but he remains a member of the Fed’s Board of Governors until 2028. The investigation adds uncertainty to the Fed’s operations and highlights ongoing tensions over the central bank’s role as an independent institution.
This episode fits a pattern where the Justice Department has pursued investigations following public pressure from Trump, including past cases against figures like former FBI Director James Comey and others—some of which were later dismissed. For now, the subpoenas and threats represent a major escalation in the long-running clash between the White House and the Federal Reserve.
