The Justice Department has launched a criminal investigation into Federal Reserve Chairman Jerome Powell, a stunning escalation of President Donald Trump’s nearly yearlong campaign to force the central bank to cut interest rates significantly.
Powell He issued a video statement Sunday evening to confirm the investigation. He said the Justice Department served the Fed with grand jury subpoenas on Friday related to testimony Powell gave to the Senate Banking Committee in June, regarding ongoing renovations to the Fed’s old headquarters in Washington.
So far, Powell has done his best to avoid a direct confrontation with the White House in a scorched-earth effort to pressure the Fed to lower borrowing costs. He was frank on Sunday in his assessment of the reasoning behind the subpoena.
“These are pretexts,” Powell said. “The threat of criminal charges is the result of the Fed setting interest rates based on our best assessment of what will serve the public, rather than following the president’s preferences.”
“It comes down to whether the Fed will be able to continue to set interest rates based on evidence and economic conditions — or whether monetary policy will be guided by political pressure or fear,” he said.
Powell added that he served in both Republican and Democratic administrations. He made it clear that he would not allow the Trump administration to remove him from his position. He added: “I will continue to do the job that the Senate has assured me to do with integrity and a commitment to serving the American people.”
Justice Department spokespeople did not immediately respond to a request for comment.
Powell has long defended the Fed’s handling of the replenishment process. Trump and other White House officials exploited the cost overruns to build a case for ousting Powell. The president visited the site last July in what quickly became a televised spectacle. At one point, Powell corrected Trump about the price of the project.
The four-year renovation of the two-century-old buildings inside the Federal Reserve headquarters has ballooned from its original cost of $1.9 billion to $2.5 billion. Because of the variety of factors, including unexpected groundwater drainage from the construction site and the need to comply with federal guidelines governing upgrades to historic buildings.