The Department of Justice has issued grand jury subpoenas to the Federal Reserve over the central bank’s $2.5 billion headquarters renovation, intensifying a standoff between the White House and the Fed.
Fed Chair Jerome Powell said the subpoenas were received Friday and threaten criminal indictments tied to his testimony before the Senate Banking Committee last June. In a rare public response, Powell said the probe is being used as leverage to influence monetary policy rather than a genuine inquiry into construction costs.
“This new threat is not about my testimony or the renovation,” Powell said. “The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on what will serve the public, rather than following the preferences of the President.”
President Donald Trump has repeatedly criticized the renovation’s cost overruns and pressed the Fed to cut rates more aggressively. The central bank has lowered rates at each of its last three meetings, but Trump has called for deeper and faster cuts and has threatened to remove Powell, whose term as chair ends in May.
The renovation’s price tag has risen from about $1.9 billion to $2.5 billion, a jump Powell acknowledged warrants scrutiny. Still, he warned the DOJ action should be viewed within a broader pressure campaign on the Fed.
By design, the Federal Reserve operates independently to make sometimes unpopular decisions, including keeping rates higher to control inflation. Economists say the subpoenas raise fresh questions about that independence as the administration seeks a larger role in interest rate policy.
Related: Federal Prosecutors Open Criminal Investigation Into Fed and Jerome Powell
Powell claims the Trump admin threatened him with criminal indictment
