WASHINGTON, D.C. (AP) — Federal Reserve Chair Jerome Powell said Sunday the Department of Justice has served the central bank with subpoenas and threatened it with a criminal indictment over his testimony this summer about the Fed’s building renovations.
The move represents an unprecedented escalation in President Donald Trump’s battle with the Fed, an independent agency he has repeatedly attacked for not cutting its key interest rate as quickly as Trump prefers. The subpoena relates to his testimony before the Senate Banking Committee in June, Powell said, regarding the Fed’s $2.5 billion renovation of two office buildings, a project that Trump criticized as excessive.
Powell on Sunday cast off what has up to this point been a restrained approach to Trump’s criticisms and personal insults, which he has mostly ignored. Instead, Powell issued a video statement in which he bluntly characterized the threat of criminal charges as simple “pretexts” to undermine the Fed’s independence when it comes to setting interest rates.
“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,” Powell said.
It’s a sharp departure from the Fed’s understated response to Trump this year. The central bank has attempted to placate the administration by dialing back some policies, such as efforts to consider the impact of climate change on the banking system, that the administration clearly opposed.
In a brief interview with NBC News Sunday, Trump insisted he didn’t know about the investigation into Powell. When asked if the investigation is intended to pressure Powell on rates, Trump said, “No. I wouldn’t even think of doing it that way.”
Powell’s term as chair ends in May, and Trump administration officials have signaled that he could name a potential replacement this month. Trump has also sought to fire Fed governor Lisa Cook, an unprecedented step, though she has sued to keep her job and courts have ruled she can remain in her seat while the case plays out. The Supreme Court will hear arguments in that case Jan. 21.
At the Senate Banking Committee hearing in June, Chairman Tim Scott, a Republican from South Carolina, said the Fed’s building renovation included “rooftop terraces, custom elevators that open into VIP dining rooms, white marble finishes, and even a private art collection.”
Powell disputed those details in his testimony, saying “there’s no new marble... there are no special elevators” and added that some items are “not in the current plan.” In July, Russell Vought, director of the Office of Management and Budget, said in a letter to Powell that his testimony “raises serious questions about the project’s compliance” with previous plans approved by a planning commission.
Still, later that month, Trump visted the building site and, while standing next to Powell, overstated the cost of the renovation. Later that day, Trump, speaking to reporters, downplayed any concerns with the renovation. He said, “they have to get it done” and added, “Look, there’s always Monday morning quarterbacks. I don’t want to be that. I want to help them get it finished.”
When asked if it was a firing offense, Trump said, “I don’t want to put that in this category.”
The Justice Department in a statement Sunday said it can’t comment on any particular case, but added that Attorney General Pam Bondi “has instructed her US Attorneys to prioritize investigating any abuse of tax payer dollars.”
Timothy Lauer, a spokesperson for U.S. Attorney Jeanine Pirro’s office, said they don’t comment on ongoing investigations.
With the subpoenas, Powell becomes the latest perceived adversary of the president to face a criminal investigation by the Trump administration’s Justice Department. Trump himself has urged prosecutions of his political opponents, obliterating institutional guardrails for a Justice Department that for generations has taken care to make investigative and prosecutorial decisions independent of the White House.
The potential indictment has already drawn concern from one Republican senator, who said he’ll oppose any future nominee to the central bank, including any replacement for Powell, until “this legal matter is fully resolved.”
“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,” said North Carolina Sen. Thom Tillis, who sits on the Banking Committee, which oversees Fed nominations. “It is now the independence and credibility of the Department of Justice that are in question.”
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Associated Press writers Seung Min Kim, Eric Tucker, Michael Kunzelman, and Alanna Durkin Richer contributed to this report.
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