White House officials are heaping blame on DC US Attorney Jeanine Pirro over her office’s criminal investigation into Fed Chair Jerome Powell, faulting her for blindsiding them with an inquiry that has forced the administration into a dayslong damage control campaign, four people familiar with the matter told CNN.
The emergence of the criminal probe earlier this week surprised and dismayed senior officials across the government. Inside the White House, officials scrambled to calm markets and reassure lawmakers and to put distance between President Donald Trump and the investigation, even though Trump himself had been one of Powell’s most strident critics.
Trump is hardly shy about trying to engineer criminal investigations of his political foes. But even against that backdrop, the investigation into Powell threw into disarray the White House’s plan to wait out the final months of his term in relative peace. It also raised concerns that Trump may now face obstacles in confirming a new, more malleable Fed chair that he sees as crucial to juicing his economic agenda.
Powell himself issued a remarkable statement confirming his office had received grand jury subpoenas and casting the probe as an attempt by Trump to pressure him to lower interest rates. Even Trump’s Treasury Secretary Scott Bessent told people he was frustrated by the move. Multiple Republican senators have also criticized the investigation, and one of them, Sen. Thom Tillis of North Carolina, vowed to withhold his vote on any nominee to replace Powell for as long as the inquiry remains open.
“Until this matter is resolved, I’m not considering anybody,” Tillis, who sits on the Senate Banking Committee that oversees the Federal Reserve, said Tuesday. “I wouldn’t consider my mother for the post under the current conditions.”
In an interview with NBC News on Sunday, Trump denied knowledge of the investigation, saying, “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.”
Asked repeatedly about the probe on Tuesday, Trump largely repeated his attacks on the Fed Chair and broadly defended his attempts to push for lower interest rates. Notably, Office of Management and Budget Director Russ Vought had invoked Trump’s name in a July letter that raised questions about Powell’s congressional testimony on a renovation project of the Fed headquarters – testimony that is now part of the federal investigation.
Trump himself showed no overt signs of anger at Pirro in the days since the probe was reported publicly. But at a White House event last week, Trump delivered a mostly critical lecture to a group of US Attorneys, suggesting at least some in the group were weak and ineffective, and asserting their actions made it harder for Attorney General Pam Bondi and Deputy Attorney General Todd Blanche to do their jobs, a person familiar with the matter said. Trump also singled out a few for praise. The episode occurred before the subpoenas to Powell were made public.
Trump’s criticism that the Department of Justice isn’t prosecuting his political foes quick enough has ramped up in recent weeks, with Trump complaining that both the US attorneys in specific jurisdictions and Bondi aren’t following through on some of the outstanding investigations into perceived political enemies, including California Senator Adam Schiff, sources familiar with the matter told CNN. Trump was also frustrated that prosecutors couldn’t re-charge former FBI Director James Comey, after a judge threw out the original case, another source said. Lawyers in many US attorneys offices across the country, particularly in jurisdictions where political cases are pending, have been walking on egg shells for months as Trump-installed loyalists have taken over.
Trump aides and allies, meanwhile, said they felt significant frustration with Pirro, who they felt had upended efforts over the last several months to tamp down the president’s attacks on Powell. Aides have also pointed fingers at top housing official Bill Pulte, an outspoken Powell critic who had been pushing for an investigation into him — including recently presenting Trump with a “wanted” poster of the Fed chair, a White House official and source familiar with the matter said.
Pirro said Monday that her office had tried to contact the Fed previously and been ignored, necessitating the use of “legal process – which is not a threat.” Her office did not respond to a request for comment on Tuesday. But in a Fox News appearance Tuesday night, Pirro called Powell’s response a “crazy video” and defended her decision to open the investigation.
“We’re talking about $1 billion in cost overruns in DC and something that is purely in my lane as the United States attorney to investigate,” she said, arguing that the subpoena was necessary to get Powell to respond to her inquiry. “If they had responded, I wouldn’t be sitting here right now.”
Pulte has denied involvement in the investigation of Powell, and in a statement, White House communications director Steven Cheung called Pulte “one of the President’s most loyal and important advisers.”
“Bill Pulte is a patriot and has the full confidence of President Trump,” he said.
Trump has frequently complained that Powell has been too slow to cut rates, deriding him for tempering economic growth and musing at times about firing him. But senior officials, including Bessent, had until now successfully persuaded Trump not to take action against Powell, arguing it would spark a meltdown in the markets — and that the Fed chair’s term was due to expire in May anyway.
Since then, Bessent had been helping guide a selection process for Trump’s new nominee for Fed chair, ahead of an official announcement in the next few weeks.
But the inquiry into Powell overseen by Pirro now threatens to complicate that timeline by casting further doubt on the administration’s insistence that it respects the Fed’s longstanding independence.
After opening its investigation into Powell in November, Pirro’s office sent Federal Reserve staff two emails over the December holidays seeking conversations, according to a person familiar with the matter. Pirro said on Fox News those emails were sent on Dec. 19 and Dec. 29. Those messages made no explicit mention of a criminal investigation or the possibility of issuing a subpoena over the Fed’s renovation or Powell’s congressional testimony on the matter, the person said.
But within days of those initial emails, which Fed staff had not yet responded to, Pirro’s office served the central bank with a subpoena. The move prompted Powell to release a video response, where he described the probe as “unprecedented” and “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.”
The rapid escalation alarmed Trump aides and allies, who questioned both the wisdom of the pursuing the criminal probe and the likelihood that prosecutors would find any substantial evidence of wrongdoing.
“Whether there’s fraud involved is perhaps worth investigating, but why not wait until after he’s out?” said Stephen Moore, a former economic adviser to Trump who remains close to the White House. “It’s not healthy, this kind of bitter rivalry between Trump and Powell.”
The move also offered Powell an opportunity to go on offense. After receiving the subpoena, the Fed chair decided it was a serious enough situation to publicly disclose, the person familiar with the matter said.
He subsequently released his video response, which rocketed around political and economic circles on Sunday night, prompting an outpouring of support from allies on both sides of the aisle and immediately putting the White House on the defensive.
That rapid response included a bipartisan group of former Fed chairs and Treasury secretaries, who decided that night in a flurry of text messages to collectively decry the investigation, according to a Powell supporter involved in the effort.
The resulting statement, which the ally said Powell had not requested, warned of an attempt to “use prosecutorial attacks to undermine” the Fed. It published on Monday and was signed by every living former Fed chair and a bipartisan group of former Treasury secretaries and chairs of the Council of Economic Advisers.
“This is just about as simple as it gets,” said the Powell ally, adding that beyond concerns about the Fed as an institution, Powell is also trusted and well-liked in Washington. “There’s just an enormous benefit of the doubt that people are willing to grant him, and there is not an enormous benefit of the doubt that people are willing to grant Donald Trump and the Justice Department.”
Amid the backlash, some Trump officials have now openly wondered whether Powell will now decide to stay at the Fed well beyond the end of his term as chair — a decision that could prevent Trump from filling his seat until 2028, two of the people familiar with the matter said.
Up until now, Powell had no desire to stick around, the Powell ally said. But “now, I would not be quite so quick to say that. I think that he might want to in some way, just out of spite.”
CNN’s Alayna Treene contributed to this report.
For more CNN news and newsletters create an account at CNN.com
