Federal Reserve Chairman Jerome Powell confirmed that the central bank has been served by the Justice Department on allegations related to testimony in Congress about the renovation of the bank’s headquarters. (Credit: Federal Reserve)
A simmering feud between the Trump administration and the Federal Reserve reached a boiling point this weekend when the government opened a criminal investigation into Chairman Jerome Powell.
What started as a disagreement over interest rate policy has turned into an unprecedented confrontation, posing the biggest challenge of Powell’s eight years as leader of the Federal Reserve.
The dispute has now reached Capitol Hill, where Republicans in Congress — including some close allies of the Trump administration — are opposing the investigation and threatening to block future nominees to lead the world’s most powerful central bank.
FEDERAL RESERVE CHAIRMAN POWELL UNDER CRIMINAL INVESTIGATION INTO LOFT RENOVATION
Jerome Powell, Chairman of the US Federal Reserve, answers questions following the Federal Open Market Committee meeting in Washington, DC, on Wednesday, May 7, 2025. (Tierney L. Cross/Bloomberg/Getty Images/Getty Images)
Perhaps the most prominent Republican to join the discourse so far is Rep. French Hill, R-Ark., chairman of the House Financial Services Committee.
Recalling his long relationship with Powell, which dates back to their time together at the Treasury Department under then-President George HW Bush, Hill said, “Then, as now, I know Mr. Powell as a man of integrity with a strong commitment to public service.”
POWELL REVEALS WHAT IT WOULD BE TO GET OUT OF THE FED NOW THE PRESSURE IS ON
Rep. French Hill, R-Ark., listens during a House Foreign Affairs Committee hearing at the Rayburn House Office Building on March 19, 2024 in Washington, D.C. (Anna Moneymaker/Getty Images/Getty Images)
“Pursuing criminal charges related to his testimony on building renovations at a time when the nation’s economy requires focus creates an unnecessary distraction,” Hill said. “The Federal Reserve is led by strong, capable individuals appointed by President Trump, and this action could undermine the ability of this and future administrations to make sound monetary policy decisions.”
Sen. Thom TillisRN.C. was among the first Republicans to sharply criticize the investigation Sunday evening, warning that it threatened the independence of both the Federal Reserve and the Justice Department.
“If there were any doubt that advisors within the Trump administration are actively pushing to end the independence of the Federal Reserve, there should be no more now,” Tillis wrote on X. “It is now the independence and credibility of the Department of Justice that are at stake.”
Tillis added that he would oppose the confirmation of any Federal Reserve nominee — including the next Fed chairman — until the legal issue is resolved.
REPUBLICAN SENATOR PROMISES TO BLOCK TRUMP FED NOMINEE OVER POWELL INVESTIGATION
Sen. Thom Tillis, R-N.C., said he would block President Donald Trump’s next Federal Reserve nominee. (Anna Moneymaker/Getty Images/Getty Images)
The warning comes as Trump weighs candidates to succeed Powell, whose term as Fed chair ends in May.
Tillis’ opposition carries particular weight given his seat on the Senate Banking Committee, where any new nominee would be vetted. If he follows through on his threat, it could result in a tie vote on the panel.
That would force a Senate vote to move forward with whoever Trump chooses, and given growing opposition from the Republican Party, would likely fail.
Sen. Lisa Murkowski, R-Alaska, supported Tillis’ decision to block any future Fed chairman nominees, adding that “the stakes are too high to look the other way: If the Federal Reserve loses its independence, the stability of our markets and the broader economy will suffer.”
After speaking with Powell Monday morning, Murkowski said, “It is clear that the administration’s investigation is nothing more than an attempt to coerce.”
Sen. Lisa Murkowski, R-Ark., said she had spoken with Federal Reserve Chairman Jerome Powell about the Justice Department investigation. (Kayla Bartkowski/Getty Images/Getty Images)
“If the Justice Department believes that an investigation into Chairman Powell is warranted based on project cost overruns — which is not unusual — then Congress should investigate the Justice Department,” Murkowski said.
Senate Majority Leader John ThuneRS.D., said he “hadn’t seen the case or whatever the allegations are yet… But I would say they better be real and serious.”
Sen. Elizabeth WarrenD-Mass., the top Democrat on the Senate Banking Committee, similarly analyzed the criminal investigation into Powell and accused Trump of installing “another sock puppet to complete his corrupt takeover of the U.S. central bank.”
“Trump is abusing the Justice Department authorities like a wannabe dictator, so the Fed is serving his interests, along with his billionaire friends,” Warren said in a statement. “This committee and the Senate should not move forward with any Trump nominee for the Fed, including the Fed chairman.”
TRUMP VS THE FEDERAL RESERVE: HOW THE COLLISION REACHED UNKNOWN TERRITORY
Senator Elizabeth Warren, a Democrat from Massachusetts, denounced the Trump administration’s latest move against the Federal Reserve. (Al Drago/Bloomberg/Getty Images/Getty Images)
While Sen. Kevin Cramer, R-N.D., did not support the investigation, he criticized Powell as “a bad Fed chairman who was elusive with Congress,” especially over cost overruns related to the renovation of the Federal Reserve headquarters.
“I don’t believe he’s a criminal, though,” Cramer said. “I hope this criminal investigation can be put to rest quickly, along with the rest of Jerome Powell’s term. We must restore confidence in the Fed.”
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The grand atrium of the Marriner S. Eccles Federal Reserve Building during a media tour of the renovation of the central bank’s headquarters in Washington, DC, on July 24, 2025. (Andrew Harnik/Getty Images/Getty Images)
The overhaul of the Fed’s two main buildings in Washington’s Foggy Bottom neighborhood is expected to cost $2.5 billion and is expected to be completed in 2027. The project is paid for by the central bank and not by taxpayers.
The Fed finances its activities independently and relies largely on interest from government bonds and fees from financial institutions.
Still, the cost overruns have drawn criticism from the president Donald Trumpwho has repeatedly seized on the project as evidence of what he has described as mismanagement at the Fed.
For now, it remains unclear what comes next as the Federal Reserve moves into largely uncharted territory.
