In this video: A Line Has Been Crossed: The Powell Investigation. Video by Benjamin Cowen.
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In January 2026, Federal Reserve Chair Jerome Powell became the subject of a criminal investigation launched by the U.S. Department of Justice (DOJ).
Core Allegations
The investigation centers on whether Powell committed perjury or made false remarks during a June 2025 congressional hearing regarding a $2.5 billion renovation of the Federal Reserve’s headquarters in Washington, D.C..
---Cost Overruns: The project is estimated to be approximately $700 million over budget.
---Disputed Features: Critics, including Rep. Anna Paulina Luna and White House housing official Bill Pulte, alleged the project included "luxury" features like VIP elevators and a rooftop terrace. Powell testified that many of these features were scrapped or mischaracterized.
Recent Developments (January 2026)
---Subpoenas Issued: On January 11, 2026, Powell confirmed the Fed had been served with grand jury subpoenas and threatened with a criminal indictment.
---Powell’s Defense: In a rare video message, Powell characterized the probe as "unprecedented" and a politically motivated pretext designed to undermine the Fed's independence and pressure the board into lowering interest rates.
---Market Impact: The news triggered a sell-off in U.S. stocks and the dollar on January 12, 2026, while gold prices rose to record highs as investors sought safe-haven assets.
---Political Fallout: Republican Senator Thom Tillis and others have questioned the DOJ's credibility, with Tillis vowing to block all Fed nominees until the legal matter is resolved to protect the bank's autonomy.
Context of Federal Independence
The investigation is part of a broader conflict between the Trump administration and the Federal Reserve.
---The "Cause" Requirement: Federal law protects the Fed Chair from being fired except for "cause" (such as malfeasance). Analysts suggest a criminal indictment could be used as legal grounds to attempt Powell's removal before his term as chair expires in May 2026.
---Other Targets: The administration has also targeted Fed Governor Lisa Cook with separate investigations; her case regarding a potential ouster is scheduled for the Supreme Court on January 21, 2026.
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