Federal prosecutors have initiated a criminal investigation into Jerome Powell, the influential chair of the Federal Reserve, placing the central bank under intense scrutiny.

This investigation has thrust the Federal Reserve into the center of a significant political and legal controversy, intensifying former President Donald Trump’s longstanding conflict with the individual responsible for overseeing U.S. interest rates.

Officials with knowledge of the situation reveal that the U.S. Attorney’s Office for the District of Columbia is investigating whether Powell provided misleading information to Congress regarding the extent and cost of a massive renovation project at the Fed’s headquarters in Washington, D.C.

The inquiry, which was sanctioned in November, is spearheaded by Jeanine Pirro, a prominent Trump ally who was appointed to lead the office last year.

The investigation is centered on Powell’s testimonies to Congress, as well as internal documentation and expenditures related to the extensive renovation of the Federal Reserve’s historic buildings near the National Mall, a project that has significantly exceeded its initial budget by hundreds of millions of dollars.

The move represents the most serious legal threat Powell has faced since becoming Fed chair and places the independence of the central bank squarely in the political crosshairs. 

Trump has repeatedly attacked Powell for refusing to sharply cut interest rates, publicly floating his removal and accusing him of ‘incompetence.’

 Trump has also suggested legal action over the renovation project, which is now estimated to cost roughly $2.5 billion.

Federal prosecutors have opened a criminal investigation into Jerome Powell, the powerful chair of the Federal Reserve

Trump has repeatedly attacked Powell for refusing to sharply cut interest rates, publicly floating his removal and accusing him of ‘incompetence’

In a rare and unusually defiant video message released on Sunday night, Powell called the investigation ‘unprecedented’ and directly challenged its legitimacy.

‘This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings,’ Powell said.

‘It is not about Congress’s oversight role; the Fed through testimony and other public disclosures made every effort to keep Congress informed about the renovation project. Those are pretexts.’

Powell went further, warning that the criminal probe strikes at the heart of the Fed’s autonomy.

‘The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president,’ he said. 

‘This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions – or whether instead monetary policy will be directed by political pressure or intimidation.’

Officials familiar with the investigation said Powell and the Federal Reserve have been served with grand jury subpoenas, and prosecutors in Pirro’s office have repeatedly requested documents related to the renovation. 

The Justice Department has not publicly detailed the evidence under review.

A spokesperson for Attorney General Pam Bondi declined to comment on the Powell probe but said Bondi has ‘instructed her US attorneys to prioritize investigating any abuses of taxpayer dollars.’

The US Attorney’s Office for the District of Columbia is examining whether Powell misled Congressabout the scope and cost of a multibillion-dollar renovation of the Fed’s Washington headquarters. The pair are pictured in July touring the Federal Reserve

The investigation lands at a pivotal moment. Trump told The New York Times last week that he has already decided whom he wants to replace Powell with and is expected to announce his choice soon. 

Kevin A. Hassett, Trump’s top economic adviser, has emerged as a leading contender.

While Powell’s term as Fed chair expires in May, his term as a member of the Federal Reserve’s board of governors runs through January 2028. 

Powell has not said whether he intends to remain at the central bank beyond this year.

The renovation project at the center of the controversy began in 2022 and is scheduled to be completed in 2027. 

It involves modernizing and expanding the Marriner S. Eccles Building and a second Fed building on Constitution Avenue – structures that date back to the 1930s and have not undergone comprehensive renovations in nearly a century.

Fed officials have said the overhaul is necessary to remove asbestos and lead, upgrade aging infrastructure, and bring the buildings into compliance with accessibility laws for people with disabilities. 

But the project’s escalating price tag – now estimated to be roughly $700 million over budget – has drawn fierce scrutiny from Republicans and Trump allies.

A 2021 planning document described features including private dining areas for top officials, new marble installations, upgraded elevators, and a rooftop terrace for staff.

When pressed about those elements during congressional testimony last June, Powell forcefully denied that they were part of the current plan.

‘There’s no V.I.P. dining room; there’s no new marble,’ Powell told lawmakers. 

‘We took down the old marble, we’re putting it back up. We’ll have to use new marble where some of the old marble broke. But there’s no special elevators. There’s just old elevators that have been there.’