Federal Reserve Chair Jerome Powell said Sunday that the Justice Department subpoenaed the central bank Friday with the threat of a criminal indictment, the latest move in a yearlong pressure campaign from the Trump administration.
Powell said the threatened indictment related to his testimony before the Senate in June about the renovation of Federal Reserve office buildings.
“No one—certainly not the chair of the Federal Reserve—is above the law,” Powell said. “But this unprecedented action should be seen in the broader context of the administration’s threats and ongoing pressure.”
Powell said the Justice Department’s subpoenas were just the latest way for the administration to exert control over the Fed and its decisions about interest rates.
Since before the start of his second term, President Donald Trump has demanded lower interest rates and has routinely attacked Powell and the central bank’s other top officials. The administration has ramped up that criticism as an affordability crisis hit consumers.
The Fed cut interest rates three times last year.
“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,” he said.
Powell said the connection to his testimony and the headquarters renovation project, which some administration officials seized on last year, were “pretexts.”
“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president,” he said.
Powell indicated that the administration’s latest tactic would not lead to his departure from the Fed, which Trump has repeatedly called for. Powell said he would “continue to do the job the Senate confirmed me to do, with integrity and a commitment to serving the American people.”
In a phone call with NBC News, Trump said he knew nothing about the Justice Department probe and attacked Powell again.
“I don’t know anything about it, but he’s certainly not very good at the Fed, and he’s not very good at building buildings,” Trump said.
Asked to respond to Powell’s saying the subpoenas were a way for the administration to pressure the Fed to lower rates, Trump said: “No. I wouldn’t even think of doing it that way.”
“What should pressure him is the fact that rates are far too high,” Trump continued. “That’s the only pressure he’s got.”
Top White House officials have accused Powell of mismanagement of a previously planned renovation of the Federal Reserve building. Over the summer, they suggested he misled Congress about the renovation of the headquarters.
The Fed said over the summer it has brought in its inspector general to review the building expansion. Powell ordered the review following criticism from Trump over the project, which was hit by cost overruns.
Powell has also said the plans have evolved over time.
A Justice Department spokesperson said they could not comment on any specific case. “The attorney general has instructed her U.S. attorneys to prioritize investigating any abuse of taxpayer dollars,” the spokesperson said.
The Federal Reserve is funded not by taxpayer money but instead by fees on services like check processing, loans it makes to banks and income from its investment portfolio of U.S. government bonds.
Sen. Thom Tillis, R-N.C., said in a statement issued shortly after Powell’s announcement that “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.”
Tillis added that he will oppose the confirmation of any Trump nominee for the Fed “until this legal matter is fully resolved.”
Markets did not immediately react in a significant way.
The U.S. dollar declined 0.2% against a basket of other currencies on the news, while S&P 500 futures fell 0.5% and Nasdaq 100 futures slipped 0.8%. Gold and silver, “safe haven” assets that investors turn to during times of political unease, rose to fresh record highs.
Trump has spent months attacking Powell, whom he appointed to the job during his first term, accusing Powell of not acting quickly enough to lower interest rates. Trump said in an interview with The New York Times last week that he had already selected a replacement for when Powell’s term ends in May.
The Justice Department has also exerted pressure on the Federal Reserve by investigating mortgage fraud allegations against Lisa Cook, a governor at the Fed. Cook has repeatedly denied the allegations, and her attorneys have said she “did not ever commit mortgage fraud.”
As a governor, Cook has a permanent vote on interest rate decisions.
