President Trump’s Department of Justice has launched an unprecedented criminal investigation against Federal Reserve Chair Jerome Powell, using prosecutorial power to pressure America’s central bank into slashing interest rates despite ongoing inflation concerns.
Story Highlights
- DOJ served Powell with subpoenas related to $2.5 billion Fed building renovations, but Powell calls it a “pretext” to force rate cuts
- Former Fed chairs Greenspan, Bernanke, and Yellen condemn the action as unprecedented attack on central bank independence
- Trump has relentlessly pressured Powell to dramatically slash rates despite inflation remaining elevated from tariff policies
- Stock markets fell immediately after Powell’s disclosure, highlighting institutional uncertainty
- Even Republican Senator Kevin Cramer expressed concern, stating Powell is “not a criminal”
Trump Administration Escalates Pressure Campaign Against Fed Chair
The Department of Justice delivered subpoenas to Federal Reserve Chair Jerome Powell on Friday regarding his June 2025 Senate testimony about building renovation costs.
Powell abandoned his typically cautious approach Sunday night, releasing a video statement characterizing the criminal investigation as a “pretext” to force the Federal Reserve to cut interest rates.
The Fed chair declared he has carried out his duties “without political fear or favor” and stated that “public service sometimes requires standing firm in the face of threats.”
Greenspan, Bernanke, Yellen and other past officials say Trump using 'prosecutorial attacks' to undermine Fed https://t.co/yADzRLwCWj
— CNBC (@CNBC) January 12, 2026
Bipartisan Economic Leadership Condemns Prosecutorial Overreach
Three former Federal Reserve chairs and multiple Treasury secretaries issued a joint statement Monday condemning the Trump administration’s actions as unprecedented.
Ben Bernanke, Janet Yellen, and Alan Greenspan joined former Treasury officials Henry Paulson, Robert Rubin, Timothy Geithner, and Jacob Lew in warning that using prosecutorial attacks against the Fed resembles “how monetary policy is made in emerging markets with weak institutions.”
The statement emphasized that Fed independence is “critical for economic performance” and achieving stable prices and maximum employment.
Building Renovation Serves as Cover for Monetary Policy Battle
While the subpoenas ostensibly concern a $2.5 billion Federal Reserve building renovation project, the real conflict centers on Trump’s year-long campaign pressuring Powell to dramatically slash the Fed’s benchmark interest rates.
Trump claims inflation is no longer a concern and rates should be cut aggressively, while Powell maintains that inflation remains elevated following the president’s tariff announcements.
This fundamental disagreement has led Trump to “relentlessly criticize and belittle Powell” in an attempt to shift blame for economic discontent away from his own policies.
Market Turmoil Reflects Institutional Uncertainty
Stock markets fell immediately following Powell’s Sunday disclosure, demonstrating investor concern about the unprecedented nature of using criminal prosecution to influence monetary policy. The timing is particularly significant as Powell’s Fed chairmanship ends in May 2026, though his governor term extends until January 2028.
This creates uncertainty about whether Powell will remain on the Fed’s board, potentially depriving the Trump administration of filling another seat with a more compliant appointee who would support aggressive rate cuts regardless of economic data.
Even Republicans Express Concern Over Prosecutorial Tactics
Republican Senator Kevin Cramer of North Dakota, described as a frequent Powell critic, expressed unease with the criminal investigation approach. Cramer stated that Powell is “not a criminal” and expressed hope that “this criminal investigation can be put to rest quickly.”
His comments suggest growing concern among some Republicans that using prosecutorial power to influence Federal Reserve policy crosses constitutional boundaries and undermines the rule of law that has traditionally protected America’s economic institutions from political interference.
Sources:
Trump’s Legal Attack on Powell Underscores His Aim for Full Control of Fed
Former Fed Chairs, Treasury Chiefs Condemn Trump Administration’s Prosecutorial Attacks
