Washington
—
Federal prosecutors have opened a criminal investigation into the Federal Reserve’s $2.5 billion renovation of its headquarters in Washington, DC.
In an extraordinary video posted by Powell on Sunday night, he called the investigation “pretext” resulting from his ongoing struggle with the administration over interest rates, saying it was a consequence of broader “threats and ongoing pressure” by the administration.
“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,” Powell said in a statement late Sunday.
“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.”
Justice Department spokesperson Chad Gilmartin declined to comment on the investigation, but said in a statement to CNN that the attorney general wants to “prioritize investigating any abuse of tax payer dollars.”
CNN has reached out to the White House for comment.
President Donald Trump and his allies have repeatedly slammed Powell over the past year for not cutting interest rates to the president’s liking. The Fed in the second half of last year lowered rates three times in row, though officials have recently said they’re unlikely to lower rates again for a while.
Trump’s pressure campaign has included a barrage of personal insults at Powell and an ongoing effort to oust Fed Governor Lisa Cook, appointed by then-President Joe Biden. The Supreme Court will hear oral arguments later this month on whether Trump can fire Cook.
The controversy began in the summer after Powell testified before Congress that the renovation was a collaboration with various agencies and that costs had changed over time.
Trump allies such as Federal Housing Finance Agency Director Bill Pulte and Office of Management and Budget Director Russ Vought have claimed the project was mismanaged. But the Fed says the upgrades to its decades-old buildings were necessary, including removing asbestos and upgrading electrical and ventilation systems.
The federal probe comes as Trump prepares to announce his pick for who will replace Powell once his term ends in May. The decision will cap a months-long search process for arguably the most influential role in the global economy.
This is a developing story and will be updated.
CNN’s Hannah Rabinowitz contributed reporting.
