The United States Attorney’s Office contacted the Federal Reserve on multiple occasions to discuss cost overruns and the chairman’s congressional testimony, but were ignored, necessitating the use of legal process—which is not a threat.
The word “indictment” has come out of Mr. Powell’s mouth, no one else’s. None of this would have happened if they had just responded to our outreach.
This office makes decisions based on the merits, nothing more and nothing less. We agree with the chairman of the Federal Reserve that no one is above the law, and that is why we expect his full cooperation.
The United States Attorney’s Office contacted the Federal Reserve on multiple occasions to discuss cost overruns and the chairman’s congressional testimony, but were ignored, necessitating the use of legal process—which is not a threat.
The word “indictment” has come out of Mr.…
— US Attorney Pirro (@USAttyPirro) January 13, 2026
Treasury Secretary Scott Bessent spent months laying the groundwork for a smooth transition at the Federal Reserve that wouldn’t rattle markets.
That plan is now in disarray.
The Justice Department’s criminal investigation into whether Fed Chair Jerome Powell misled Congress about renovations at the Fed headquarters — and allegations over who leaked the news — has the White House in damage-control mode. Officials are scrambling to reassure markets and create distance from an episode that aides say was never meant to unfold, according to five people familiar with the administration’s reaction who were granted anonymity to discuss it.
The inquiry, which blindsided many White House aides, is renewing fears over the future of the central bank’s independence and offering fresh fodder for concerned Senate Republicans, many of whom will be needed to confirm the next Fed chair. Powell, whose term as chair ends in May, fanned those flames Sunday night, releasing an unusually direct statement framing the investigation as an attempt to pressure the institution to lower borrowing costs.
“This feud between Powell and the White House is, obviously, not good for markets,” said Stephen Moore, a former adviser to President Donald Trump who remains close to the White House.
While Moore blasted Powell’s management of the central bank’s renovation, he said, “now is not the time to be bringing a criminal investigation against the Fed chairman.”
Privately, some White House officials see the episode as radioactive, with aides and allies eager to distance themselves from a probe they believe could do more damage to the White House than to Powell. One of the five people familiar said some inside and close to the White House are “freaked out” that a further threat to the Fed chief’s job security could spook the bond market.