Pressure is building around the US Federal Reserve at a moment when political tensions and economic policy are already colliding.
What started as scrutiny over an expensive renovation project has now escalated into a criminal investigation that critics say could shake the very foundation of the central bank’s independence.
GOP Senator Sounds Alarm Over “Unprecedented” Probe
Republican Senator Thom Tillis of North Carolina has openly condemned the Justice Department’s criminal probe into Federal Reserve Chair Jerome Powell, calling it an extraordinary move with dangerous implications.
According to Tillis, the investigation risks undermining not only the independence of the Federal Reserve but also the credibility of the Justice Department itself.
Tillis, who sits on the powerful Senate Banking Committee, went a step further by pledging to block all future Federal Reserve nominees until the issue is resolved, a move that could stall key economic appointments.
Subpoenas Confirmed as Powell Pushes Back
Powell confirmed on Sunday that the Federal Reserve has been subpoenaed by the Justice Department.
The investigation centers on soaring costs tied to the long-running renovation of the Fed’s headquarters in Washington, D.C.
In a defiant response, Powell described the investigation as part of an “extraordinary” pressure campaign aimed at influencing the Fed’s policy decisions, particularly on interest rates.
He revealed that grand jury subpoenas were issued on Friday, warning of possible criminal charges linked to his Senate testimony earlier this year.
Tillis Accuses White House of Undermining Independence
Taking to X, Tillis did not mince words.
He argued that any lingering doubt about whether Trump administration advisers were trying to dismantle the Fed’s independence should now be gone.
According to him, the investigation has crossed a line, putting the Justice Department’s own impartiality into question.
His stance is striking, especially given how rare it is for Republican senators to publicly challenge the White House so forcefully.
Trump Distances Himself but Takes Aim at Powell
President Donald Trump has publicly claimed he knows nothing about the investigation, yet he has continued to criticize Powell in blunt terms.
Trump mocked the Fed chair as ineffective, saying Powell was “not very good at the Fed” and “not very good at building buildings.”
Although Trump has repeatedly hinted at removing Powell from his position, he has so far stopped short of doing so. Instead, he has fixated on the ballooning renovation costs as a point of attack.
Renovation Costs Become a Political Flashpoint
The renovation of the Fed’s 88-year-old headquarters and a neighboring building has ballooned by roughly $600 million, climbing from an original estimate of $1.9 billion.
Officials say the increases stem largely from security upgrades, including blast-resistant windows and structural reinforcements.
Last July, Trump made an unusual visit to the construction site.
Wearing hard hats, Trump and Powell clashed publicly over the price tag, turning a construction project into a political spectacle.
Powell Links Investigation to Interest Rate Disputes
Powell has been clear about what he believes is driving the probe.
He argues that the threat of criminal charges is retaliation for the Fed’s refusal to bend to presidential pressure on interest rates.
According to Powell, the central bank has made decisions based on what it believes is best for the public, not on political preferences.
He warned that the investigation should be viewed as part of a broader campaign of threats and intimidation.
A Senator Unbound by Political Pressure
Tillis’ willingness to confront the administration is shaped by his unusual position.
Having announced his retirement later this year, he no longer faces the political risks that come with crossing Trump.
Just last week, Tillis vented his frustrations on the Senate floor, declaring he was “sick of stupid.”
During that speech, he sharply criticized White House deputy chief of policy Stephen Miller and blasted comments suggesting the US should take control of Greenland, calling the idea a needless distraction.
Bipartisan Outrage Begins to Build
The controversy has sparked anger beyond Republican ranks.
Democratic Senator Elizabeth Warren accused Trump of trying to complete what she called a “corrupt takeover” of the Federal Reserve by pushing Powell out and replacing him with a loyalist.
The investigation itself was approved in November by US Attorney Jeanine Pirro and focuses on whether Powell misrepresented the scope and cost of the renovation during his testimony to Congress.
What Prosecutors Are Examining
Prosecutors are reviewing Powell’s public statements, internal Fed records, and spending tied to the overhaul of the historic buildings near the National Mall.
These structures date back to the 1930s and had not undergone a full renovation in nearly a century.
Powell has consistently defended the project, saying it was necessary to remove asbestos and lead, modernize failing infrastructure, and meet accessibility requirements.
Disputes Over Testimony and Design Claims
When questioned by lawmakers last June about alleged luxury features such as private dining rooms, marble upgrades, and special elevators, Powell flatly denied those claims.
He insisted no VIP dining areas were planned and said old marble was simply being restored, not replaced.
Following that testimony, the Fed released detailed explanations, photos, and even a virtual tour to support Powell’s account.
Officials attributed the cost overruns to inflation, labor expenses, and unexpected contamination problems.
A Central Bank Under Pressure and an Uncertain Road Ahead
Despite those explanations, the legal threat has plunged the world’s most powerful central bank into turmoil.
Fears are growing that the Federal Reserve’s long-guarded independence is facing one of its most serious challenges in decades.
With Powell’s term set to expire in May and Trump openly signaling he wants a successor willing to cut rates immediately, the stakes could not be higher.
The question now is whether this confrontation ends quietly—or reshapes the balance between politics and monetary policy for years to come.
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