A Justice Department criminal investigation into Federal Reserve Chair Jerome Powell has intensified political divisions in Washington and raised concerns about the independence of the U.S. central bank. The inquiry centers on Powell’s past testimony to Congress regarding a multibillion-dollar renovation project at the Federal Reserve’s headquarters in Washington, D.C., with an estimated cost of about $2.5 billion.

Powell disclosed on January 12, 2026, that federal prosecutors have issued grand jury subpoenas as part of the investigation. The subpoenas reportedly seek records and testimony related to statements Powell made before lawmakers about the scope, timeline, and expenses associated with the renovation. Powell has denied wrongdoing and said his testimony was accurate to the best of his knowledge at the time.

Republican lawmakers aligned with President Donald Trump have accused Powell of misleading Congress, with some calling for his resignation or possible criminal charges. The Trump administration has sharply criticized Powell in recent months, particularly over the Federal Reserve’s interest rate policies, which officials argue have slowed economic growth. Administration allies frame the investigation as a matter of accountability rather than political pressure.

Democrats and former Federal Reserve officials have warned that the probe could undermine the central bank’s independence. They argue that criminal investigations targeting a sitting Fed chair risk unsettling financial markets and investor confidence.

The Justice Department has not publicly detailed the scope of the investigation or indicated whether charges are likely. Powell remains in office as the inquiry continues.

Sources: PBS News, ABC News, Reuters