The ongoing Justice Department investigation into Federal Reserve Chair Jerome Powell prompted a late-night phone call from Treasury Secretary Scott Bessent to former President Donald Trump, warning that the situation had become chaotic.

Earlier, in a remarkable video statement, Powell accused Trump of using potential legal action as a means to pressure the Federal Reserve into cutting interest rates. This accusation came shortly after Powell received a subpoena on Friday regarding a $2.5 billion renovation project at the Fed’s headquarters.

In response, Trump stated he was unaware of any investigation being conducted by the Department of Justice.

Concerned about potential market instability, Bessent decided to reach out to Trump directly.

“The secretary was displeased with the situation and made his concerns clear to the president,” a source with knowledge of Bessent’s late-night conversation with Trump revealed to Axios.

The Fed’s independence is considered sacrosanct because any political interference raises fears of reckless money-printing, spiraling inflation and currency collapse. 

The market delivered a split verdict on Monday. Gold surged to a new record in a flight to safe-haven assets, Treasury yields ticked up amid inflation fears, while stocks bounced and the S&P500 notched a fresh all-time high amid the chaos.

Former Fed chair Janet Yellen, who served as Joe Biden’s Treasury Secretary, warned that the US was on ‘the road to a banana republic.’ 

Secretary of Treasury Scott Bessent speaks with President Trump at The White House Digital Assets Summit at the White House in Washington, DC, on March 7

U.S. Attorney for the District of Columbia Jeanine Pirro arrives to attend a New Year’s Eve party with U.S. President Donald Trump at his Mar-a-Lago Club in Palm Beach, Florida

Director of the Federal Housing Finance Agency Bill Pulte speaks with reporters at the White House, Friday

US Attorney Jeanine Pirro launched the investigation without informing the Treasury Department, sources told Axios.

The ex-Fox anchor ‘went rogue,’ an administration official claimed.

Pirro’s bold action comes as her boss, Attorney General Pam Bondi, has faced mounting criticism from Trump in recent weeks over what he sees as her failure to aggressively pursue his priorities, the Wall Street Journal reported on Monday. 

But another official said Pirro would not have proceeded without a ‘signal that the president would be supportive.’

The signal, officials believe, was relayed last week at a meeting in Florida between Trump and Federal Housing Finance Agency Director Bill Pulte – who denied any involvement on Bloomberg TV on Monday.

Bessent has history with Pulte.

The Treasury Secretary and the federal housing chief almost came to blows in a nightclub in September, according to Politico.

‘Why the f*** are you talking to the president about me? F*** you,’ Bessent reportedly told Pulte. ‘I’m gonna punch you in your f***ing face.’

Pulte, who the Financial Times has called an ‘agent of chaos,’ has leveraged his massive social media following to bypass traditional political channels. 

He was the primary architect and public face of a 50-year mortgage proposal earlier this year which was ridiculed by critics.

Pulte confirmed to reporters on Friday that the policy had been canned.

U.S. President Donald Trump, Federal Reserve Chair Jerome Powell, and U.S. Senator Tim Scott (R-SC) tour the Federal Reserve Board building, which is currently undergoing renovations, in Washington, D.C., U.S., July 24

Janet Yellen gives remarks at an event celebrating the Community Development Financial Institutions FUND (CDFI) at the U.S. Treasury Department on November 21, 2024 in Washington, DC 

Former Fed chairs Yellen, Ben Bernanke and Alan Greenspan criticized the Trump administration for its investigation of Powell on Monday.  

Every living former Fed chair said in a joint statement that the investigation amounted to an ‘unprecedented attempt’ to undermine the central bank’s independence. 

Trump has repeatedly attacked Powell for not cutting rates faster or further, despite the Fed lowering borrowing costs at three of its past four meetings. 

The president has publicly demanded rates as low as 1 percent and has openly discussed replacing Powell when his term ends in May. 

Republican senators warned that interfering with the central bank could have serious economic consequences. 

Lisa Murkowski said the stakes were enormous for investors and households alike.

‘The stakes are too high to look the other way: if the Federal Reserve loses its independence, the stability of our markets and the broader economy will suffer,’ Murkowski wrote on X.

Another senior Republican, Thom Tillis, said the probe removed any doubt that the administration was trying to exert control over the central bank. 

‘If there were any remaining doubt whether advisers within the Trump Administration are actively pushing to end the independence of the Federal Reserve, there should now be none,’ Tillis said.

The White House, DOJ and Treasury Department have been contacted for comment.