When Federal Reserve Chairman Jerome Powell said on January 11 that he was under federal criminal investigation, President Donald Trump told NBC News, “I don’t know anything about that.”
President Trump may have been secretive about the details of the Justice Department investigation (which the New York Times reported was approved by U.S. Attorney for the District of Columbia, Jeanine Pirro, in November), but he was clear about his desire to oust Powell.
Recommended stories
list of 3 itemsend of list
The investigation focuses on Mr. Powell’s oversight of renovations to the bank’s headquarters. He is accused of misleading the U.S. Congress about renovation plans. The Fed has been renovating the building since 2021 under a project first approved during the Trump administration’s first term. The $2.5 billion cost is about $600 million more than originally budgeted due to design changes, higher costs, and the inclusion of more asbestos than expected.
The investigation is the most dramatic escalation of long-simmering tensions between Mr. Trump and Mr. Powell, who was initially selected by the president for the Fed’s top post but has since drawn the ire of Mr. Trump with his slow approach to lowering interest rates. The Federal Reserve has been lowering interest rates in stages, cutting rates three times at the end of last year. Setting interest rates too low can increase inflation.
President Trump’s attacks on central banks threaten their independence and ability to drive monetary policy independent of political pressure. Experts say it will also reduce confidence in the U.S. economy.
All eyes will be on the next Fed interest rate review meeting scheduled for January 27-28.
During a Dec. 29 press conference with Israeli Prime Minister Benjamin Netanyahu, President Trump said his team was considering a “serious incompetence case” against Powell.
Trump may have been referring to claims of “gross negligence,” which can be pursued under either civil or criminal law, depending on its severity.
This is different from a criminal investigation launched by the Justice Department, which claims Mr. Powell lied to Congress about the cost and scope of the renovations. The Justice Department has not yet commented on the investigation.
Chairman Powell’s term ends in May, but he can remain on the Fed board until January 2028.
“No one is above the law, certainly not the Chairman of the Federal Reserve,” Powell said in a video statement. “However, this unprecedented action should be seen in the broader context of the regime’s threats and continued pressure.”
The White House did not respond to requests for comment.
The investigation into Powell is in line with other Trump administration efforts to prosecute the president’s opponents, including former FBI Director James Comey and New York Attorney General Letitia James. Both prosecutors have experienced setbacks, including grand juries refusing to indict or judicial decisions favoring the defendants.
In a Truth Social post in September, President Trump directly addressed Attorney General Pam Bondi and urged her to step up the Justice Department’s prosecutorial efforts, including against Democratic Sen. Adam Schiff. “Justice must be served now!” he wrote.
President Trump also moved to fire another Fed director, Lisa Cook, citing a “criminal referral” related to mortgage fraud by Trump-appointed head of the Federal Housing Finance Agency, William Pulte. Ms Cook is appealing her dismissal and the trial is ongoing.
President Trump’s Dec. 29 statement is the clearest he has ever said about using the legal system to remove Powell.
President Trump, in his second term, has frequently called for Powell’s resignation and has frequently attacked him.
April 17, 2025: “I’m not happy with him. I told him that, and, oh, if I want him out, he’ll leave right away.” June 18, 2025: “Frankly, there are some stupid people at the Fed.”
July 13, 2025: “Jerome Powell has been extremely detrimental to our country.”
July 15, 2025: “Talking to that man is like talking to nothing. It’s like talking to a chair. No personality, no high intelligence, nothing.”
July 22, 2025: “I was very nice to him at first because I knew how to sell, but at a certain point it didn’t matter anymore, because the guy just wasn’t a smart guy.”
August 1, 2025: Powell is a “stubborn fool.”
August 13, 2025 and September 20, 2025: Powell is “incompetent.”
November 18, 2025 and December 9, 2025: Powell is a “stupid man” and “not a wise man.”
Can Trump fire Powell?
If the Justice Department is able to convict Mr. Powell, it would meet the narrow grounds for removing the Fed chairman “in the president’s cause.” According to the Supreme Court’s decision regarding the Federal Trade Commission, this refers to “inefficiency, neglect of duty, or professional misconduct.”
In its May decision allowing the president to fire members of the independent commission, the Supreme Court noted that the decision did not affect the Fed, which it called a ” uniquely structured quasi-private organization.”
If the Supreme Court rules against Cook and Powell is found guilty, it would open two spots that the Trump administration could fill with its nominees.
However, President Trump’s actions have sparked a backlash, including from Republicans. North Carolina Sen. Thom Tillis called for a Justice Department investigation.
Tillis, a member of the Banking Committee that oversees the Fed, said he would not support President Trump’s future Fed nominations. The ruling party has a slim majority on the committee, 13 to 11.
Peter Conti-Brown, a professor at the University of Pennsylvania who specializes in financial regulation, told PolitiFact in July that Powell could claim that the use of the renovation budget was a “pretext” for the firings. A “pretext” for termination is a legal term that refers to a false reason given by an employer to hide the real reason for firing an employee.
“For the courts to evaluate removal attempts after the fact would be a very harsh assessment of both the hostility and pretext against President Trump,” Conti-Brown said.
In a video response, Powell said the investigation was a “pretext” to cover up the real reason for his desire to remove the administration, which is a dispute over interest rate settings.
