Federal prosecutors in Washington, D.C., have opened a criminal investigation into Jerome Powell, Chair of the U.S. Federal Reserve, over the central bank’s $2.5 billion renovation of its headquarters and whether Powell made false or misleading statements to Congress about the project.
According to officials briefed on the matter, the inquiry is being handled by the U.S. Attorney’s Office for the District of Columbia and includes a review of Powell’s public testimony as well as an examination of internal spending and procurement records related to the renovation. The investigation was approved in November by U.S. Attorney Jeanine Pirro, a longtime ally of President Donald Trump who was appointed to lead the office last year.
The probe marks a significant escalation in President Trump’s long-running feud with Powell, whom the president has repeatedly criticised for resisting calls to cut interest rates aggressively. Trump has publicly accused the Fed chair of incompetence and has threatened to fire him, despite having nominated Powell to the role in 2017.
New Investigation
At the centre of the investigation is the extensive renovation of the Federal Reserve’s historic Marriner S. Eccles Building and an adjacent Fed-owned structure in Washington. The project, initially budgeted at a lower cost, has risen to an estimated $2.5 billion, drawing scrutiny from lawmakers and administration officials. Critics have alleged that the scale and cost of the renovation were understated in congressional testimony.
In June last year, Powell appeared before the Senate Banking Committee, where he defended the project and attributed cost overruns to inflation, higher construction costs, security requirements, and the remediation of hazardous materials such as asbestos and lead. Investigators are now assessing whether those statements accurately reflected the scope and nature of the work.
In a statement released after news of the investigation emerged, Powell described the inquiry as unprecedented and strongly denied any wrongdoing. He said the Federal Reserve had been transparent with Congress and insisted that his testimony was truthful and complete. Powell also warned that politicising law enforcement actions against the central bank risked undermining the Fed’s independence.
The Justice Department has reportedly issued subpoenas to the Federal Reserve seeking documents related to the renovation, including contracts, internal communications, and financial records. No charges have been filed, and officials stressed that the investigation is ongoing.
President Trump, speaking in a recent interview, said he had already decided who he wants to replace Powell as Fed chair and is expected to announce his choice soon. Kevin Hassett, the president’s top economic adviser, is widely viewed as a leading contender.
Trump’s Feud With Powell
Trump nominated Powell in 2017, and he took office the following year, but relations quickly soured as the Federal Reserve raised interest rates in 2018 and 2019 to contain inflationary risks. Trump publicly accused Powell of undermining economic growth and at one point explored removing him, a move that unsettled financial markets and was later deemed legally problematic.
Tensions eased briefly during the COVID-19 crisis in 2020, when the Fed slashed rates and rolled out emergency stimulus, but resurfaced as inflation surged in subsequent years. After President Joe Biden reappointed Powell in 2022, Trump then out of office renewed criticism during his campaign, arguing the Fed had kept rates too high for too long.
Since returning to the White House, Trump has intensified pressure on Powell to deliver sharp rate cuts, while also seizing on the soaring cost of the Federal Reserve’s Washington headquarters renovation as evidence of alleged mismanagement.
