US Federal Prosecutors Open Criminal Inquiry into Fed Chair Powell
Breaking News: Unprecedented Federal Investigation
In a stunning development on January 13, 2026, US federal prosecutors have opened a criminal investigation into Federal Reserve Chair Jerome Powell, sending shockwaves through the financial and political establishments. The probe, first reported by the New York Times, centers on Powell's testimony to Congress regarding renovations of Federal Reserve buildings.
Key Details of the Investigation
Scope and Origins
- Investigation overseen by US Attorney's Office for the District of Columbia
- Focuses on potential misrepresentations about Federal Reserve building renovation project
- Total renovation cost: $2.5 billion, approximately $600 million over original budget
Powell's Response
In a rare and extraordinary video statement, Powell characterized the investigation as part of broader political pressure, stating: "This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions, or whether monetary policy will be directed by political intimidation."
Political Context and Tensions
Trump Administration's Ongoing Pressure
- President Trump has consistently criticized Powell for not cutting interest rates
- The investigation appears linked to Trump's long-standing desire to replace Powell
- Former Fed Chair Janet Yellen called the probe "extremely chilling"
Potential Implications
Federal Reserve Independence
The criminal inquiry raises significant questions about the Federal Reserve's traditional political independence. Experts warn this could set a dangerous precedent for future monetary policy decisions.
Potential Replacement
With Powell's term ending in May 2026, Trump is preparing to announce a new Federal Reserve chair. Potential candidates include:
- Kevin Hassett (National Economic Council Director)
- Kevin Warsh (Former Fed Governor)
- Rick Rieder (BlackRock Global Fixed Income CIO)
Expert Perspectives
"Knowing Powell as well as I do, the odds that he would have lied are zero," said Janet Yellen. "This appears to be an attempt to remove him from his position."
What Happens Next
- Powell will likely challenge the investigation
- Markets will closely monitor potential impacts on monetary policy
- Political scrutiny of the Federal Reserve is expected to intensify
Conclusion
This unprecedented investigation represents a critical moment for US financial institutions, challenging long-standing norms of Federal Reserve independence.