Powell says DOJ served Fed subpoenas, threatened indictment

• Key insight: Federal reserve Chair Jerome Powell said the central bank had been served subpoenas by the Department of Justice.
• Expert quote: “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.” — Federal Reserve Chair Jerome Powell
• Forward look: The move comes as the White House is mulling its pick to succeed Fed Gov. Stephen Miran, whose term expires Jan. 31. The Supreme Court is also poised to hear oral argument on the limits of the president’s ability to remove Fed Governors.  

Federal Reserve Chair Jerome Powell Sunday evening issued a recorded video statement saying that the central bank has been served grand jury subpoenas from the Justice Department “threatening a criminal indictment” over his testimony last June concerning ongoing renovations at Federal Reserve headquarters.

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“On Friday, the Department of Justice served the Federal Reserve with grand jury subpoenas, threatening a criminal indictment related to my testimony before the Senate Banking Committee last June,” Powell said. “I have deep respect for the rule of law and for accountability in our democracy. No one — certainly not the chair of the Federal Reserve — is above the law.”

Powell then went on to frame the subpoenas and potential indictment in uncharacteristically stark terms, saying the “unprecedented action” should be considered part of the administration’s ongoing campaign to force the central bank to lower interest rates.

“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. “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.”

President Trump, who first nominated Powell to serve as Fed Chair in 2017, has had a contentious relationship with the bookish, reserved Powell for years, but Trump’s effort to bend the Fed to his will in the first year of his second term has been without precedent. Trump floated firing Powell for months, ultimately turning to cost overruns related to the Fed headquarters renovation as a potentially fireable offense, going so far as to visit the construction site last July. 

Trump then moved to terminate Fed Gov. Lisa Cook via social media post in August over a criminal referral made by Federal Housing Finance Agency Director Bill Pulte to the DOJ concerning mortgage applications made by Cook in 2021. Cook sued Trump and the Fed, winning a preliminary injunction allowing her to remain at her post as her suit progresses. The case is set for oral argument before the Supreme Court on Jan. 21.

Powell has repeatedly and consistently brushed off any efforts by interviewers or reporters to push back on Trump’s threats or even comment on his policies or proposals save in purely economic terms. While his term as Fed chair expires in May, his term as Fed Governor does not expire until 2028. Powell has not said whether he will resign when his term as chair is up, as is the longstanding custom. That typically reticent tone makes Powell’s description of the significance of the DOJ subpoenas especially significant.

“I have served at the Federal Reserve under four administrations, Republicans and Democrats alike,” said Powell, who has served on the Fed Board of Governors since 2012. “In every case, I have carried out my duties without political fear or favor, focused solely on our mandate of price stability and maximum employment. Public service sometimes requires standing firm in the face of threats. I will continue to do the job the Senate confirmed me to do, with integrity and a commitment to serving the American people.”

Senate Banking Committee Ranking Member Elizabeth Warren, D-Mass, said in a statement that the subpoenas come as Trump is preparing to announce his pick to replace Fed Gov. Stephen Miran, whose term expires on Jan. 31. That pick is expected to ultimately be nominated as the next Fed chair, Warren said, and Trump is using the Justice Department to pressure Powell to resign early. Warren said she would urge the committee to block all Fed nominations from the White House.

“Trump is abusing the authorities of the Department of Justice like a wannabe dictator so the Fed serves his interests, along with his billionaire friends,” Warren said. “This Committee and the Senate should not move forward with any Trump nominee for the Fed, including Fed Chair.”