Fed’s $2.5B Renovation Sparks DOJ Probe

Federal Reserve Chair Jerome Powell claims DOJ grand jury subpoenas targeting his congressional testimony are political intimidation designed to pressure Fed monetary policy, sparking a constitutional crisis over central bank independence.

Story Highlights

DOJ served Fed with grand jury subpoenas January 9, threatening criminal charges over Powell’s Senate testimony
Powell alleges subpoenas are pretext to pressure Federal Reserve on interest rate decisions
Investigation centers on $2.5 billion Fed headquarters renovation project defended by Powell
Bipartisan senators condemn probe as assault on Fed independence amid Trump’s push for control
Market uncertainty rises as constitutional showdown threatens core principle of apolitical monetary policy

DOJ Escalates Pressure Campaign Against Fed Leadership

The Department of Justice served the Federal Reserve with grand jury subpoenas on January 9, 2026, targeting Chair Jerome Powell’s June 2025 testimony before the Senate Banking Committee. The subpoenas threaten criminal indictment over Powell’s defense of a multi-billion dollar headquarters renovation project. U.S. Attorney Jeanine Pirro justified the action, claiming the Fed ignored previous outreach attempts regarding cost overruns and testimony accuracy.

Powell responded with an unprecedented video statement on January 11, characterizing the subpoenas as political retaliation rather than legitimate oversight. He declared that “threat of criminal charges is a consequence of not following the president’s preferences” on monetary policy. This marks the first time in Federal Reserve history that a Chair has faced grand jury subpoenas over congressional testimony, escalating tensions between the Trump administration and the independent central bank.

Renovation Project Becomes Flashpoint for Political Control

The investigation focuses on Fed headquarters renovation costs that ballooned from $1.9 billion to $2.5 billion, drawing scrutiny from Office of Management and Budget Chair Russell Vought. During his Senate testimony, Powell defended the project against accusations of extravagant spending, denying claims about new marble installations, special elevators, water features, or rooftop gardens. Vought had previously labeled the renovations “ostentatious” and potentially illegal.

Attorney General Pam Bondi’s DOJ has prioritized investigating “abuse of taxpayer dollars,” making the Fed renovation a prime target. However, Powell and his defenders argue the subpoenas represent a pretext for broader political pressure on Fed policy decisions. The timing coincides with Trump’s repeated demands for lower interest rates and threats to fire Powell when his term expires in May 2026.

Constitutional Crisis Threatens Fed Independence

Bipartisan senators condemned the DOJ action as an unprecedented assault on Federal Reserve independence. Republican Senator Thom Tillis questioned the credibility of DOJ motives, while Democrats Chuck Schumer, Elizabeth Warren, and Mark Warner characterized the probe as political intimidation. All three living former Fed Chairs issued a rare joint statement criticizing the investigation as a threat to the institution’s autonomy.

Powell Says DOJ Served Fed With Grand Jury Subpoenas https://t.co/bgFIh6whEV

— Fearless45 (@Fearless45Trump) January 12, 2026

The confrontation undermines a core principle of American monetary policy: insulation from political interference to enable data-driven decisions on interest rates and inflation control. Market uncertainty has already begun affecting borrowing costs, potentially harming families and small businesses. Long-term erosion of Fed credibility risks politicizing monetary policy and triggering inflation spikes that devastate working Americans.