Federal prosecutors open criminal investigation into the Fed and Jerome Powell | CNN Business
Federal prosecutors have initiated a criminal investigation into the Federal Reserve’s $2.5 billion headquarters renovation in Washington, DC, according to CNN Business reporting on January 11, 2026. Federal Reserve Chair Jerome Powell stated in a Sunday evening video that the investigation constitutes “pretext” stemming from the administration’s ongoing pressure regarding interest rate policy, characterizing it as part of broader “threats and ongoing pressure” directed at the Fed’s independence.
Powell directly attributed the investigation to the Federal Reserve’s decision to set interest rates based on economic conditions rather than presidential preferences. “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, emphasizing that the investigation threatens the Fed’s ability to conduct monetary policy free from political intimidation.
Trump has previously threatened to sue Powell over the renovation project, claiming mismanagement and cost overruns. Trump allies including Federal Housing Finance Agency Director Bill Pulte and Office of Management and Budget Director Russ Vought have publicly attacked the project’s management, though the Federal Reserve maintains the upgrades were necessary for critical infrastructure improvements, including asbestos removal and electrical system replacements.
The investigation arrives as Trump escalates his campaign to reshape Federal Reserve leadership, having already targeted Fed Governor Lisa Cook with removal efforts while preparing to announce Powell’s successor ahead of his May term expiration. The Justice Department declined substantive comment but stated through spokesperson Chad Gilmartin that the attorney general prioritizes investigating “any abuse of tax payer dollars.”