Trump’s DOJ Closes In: Fed Chair Under Fire for $2.5B HQ Overhaul

Paul Riverbank, 1/12/2026Fed Chair Jerome Powell faces a criminal probe over $2.5B in renovation costs, intensifying tensions between central bank independence and political power—just as economic stability hangs in the balance.

Late last Friday, as dusk settled over the capital, federal agents delivered an unambiguous message: grand jury subpoenas, served directly to the Federal Reserve. Chair Jerome Powell, who by then was already hounded by reports of ballooning renovation costs for the Fed’s headquarters, stepped in front of a camera two days later to confirm the news, offering a tight-lipped but measured address to the public. His message: the Federal Reserve would “continue to do the job the Senate confirmed me to do, with integrity and a commitment to serving the American people.”

At the heart of this investigation—spearheaded by the US Attorney’s Office in Washington, D.C.—lies a complex question. Did Powell mislead Congress about how much the ongoing refurbishment of the Fed’s main building would ultimately cost? The project was supposed to run a tab of $1.9 billion when announced back in 2021. That figure has since swelled by $600 million. The Fed chalks up the jump to pandemic-era inflation, lurking hazards like asbestos, and new security features that the original estimate hadn’t anticipated.

As it stands, the Justice Department has refused to offer details, preferring, for now, to speak only through a brief, tightly controlled statement: “The attorney general wants to prioritize investigating any abuse of taxpayer dollars.” Deliberate vagueness has defined these early days, leaving the press and public to read between the lines.

Powell, on the other hand, is not mincing words. In his video statement, he dismissed the criminal probe as a pretext—one, he suggested, rooted less in fiscal stewardship than in a simmering power struggle. “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 declared.

This tension did not emerge overnight. President Trump—never shy with his critiques—has repeatedly chastised Powell for not slashing interest rates aggressively enough, preferring lighter monetary reins to spark quicker recovery and growth. With Powell’s tenure up in May 2026, Trump’s recent public musings about having a replacement already in mind have only sharpened the sense that the standoff now transcends routine oversight.

The timing is delicate. The economy, while no longer running hot, hasn’t quite settled into the gentle landing the Fed seeks. Prices are still rising faster than policymakers want, and the job market, once robust, is beginning to show cracks. As all this plays out, traders and investors took Powell’s legal jeopardy seriously—just hours after the subpoenas, the dollar slipped in value, a quiet but unmistakable signal that Wall Street doesn’t love the idea of political winds buffeting the central bank.

Michael Brown, a strategist at Pepperstone who rarely minces words himself, summed it up on Monday: “Institutional confidence in the US is again called into question.”

Some observers recall the era when the Fed’s inner workings were shrouded in mystery and public appearances by the chair were rare, choreographed affairs. Now, with live-streamed statements and criminal investigations making headlines, transparency is not in short supply—though the sense of uncertainty arguably is.

Congress is now watching as closely as the rest of us. The stakes: potentially more than just one leader’s reputation or the price tag on a historic building. How this conflict unfolds could shape the nation’s sense of how government should function when ambition, policy, and oversight all meet in the same ornate marble halls.

The Federal Reserve’s grand neoclassical headquarters stands at the heart of Washington, imposing in white stone and set among embassies and museums—a symbol, for many, of economic stewardship. Lately, however, it’s become the epicenter of a fraught political and legal confrontation, with the institution’s independence facing a challenge unlike any in its recent memory.Late last Friday, as dusk settled over the capital, federal agents delivered an unambiguous message: grand jury subpoenas, served directly to the Federal Reserve. Chair Jerome Powell, who by then was already hounded by reports of ballooning renovation costs for the Fed’s headquarters, stepped in front of a camera two days later to confirm the news, offering a tight-lipped but measured address to the public. His message: the Federal Reserve would “continue to do the job the Senate confirmed me to do, with integrity and a commitment to serving the American people.”At the heart of this investigation—spearheaded by the US Attorney’s Office in Washington, D.C.—lies a complex question. Did Powell mislead Congress about how much the ongoing refurbishment of the Fed’s main building would ultimately cost? The project was supposed to run a tab of $1.9 billion when announced back in 2021. That figure has since swelled by $600 million. The Fed chalks up the jump to pandemic-era inflation, lurking hazards like asbestos, and new security features that the original estimate hadn’t anticipated.As it stands, the Justice Department has refused to offer details, preferring, for now, to speak only through a brief, tightly controlled statement: “The attorney general wants to prioritize investigating any abuse of taxpayer dollars.” Deliberate vagueness has defined these early days, leaving the press and public to read between the lines.Powell, on the other hand, is not mincing words. In his video statement, he dismissed the criminal probe as a pretext—one, he suggested, rooted less in fiscal stewardship than in a simmering power struggle. “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 declared.This tension did not emerge overnight. President Trump—never shy with his critiques—has repeatedly chastised Powell for not slashing interest rates aggressively enough, preferring lighter monetary reins to spark quicker recovery and growth. With Powell’s tenure up in May 2026, Trump’s recent public musings about having a replacement already in mind have only sharpened the sense that the standoff now transcends routine oversight.The timing is delicate. The economy, while no longer running hot, hasn’t quite settled into the gentle landing the Fed seeks. Prices are still rising faster than policymakers want, and the job market, once robust, is beginning to show cracks. As all this plays out, traders and investors took Powell’s legal jeopardy seriously—just hours after the subpoenas, the dollar slipped in value, a quiet but unmistakable signal that Wall Street doesn’t love the idea of political winds buffeting the central bank.Michael Brown, a strategist at Pepperstone who rarely minces words himself, summed it up on Monday: “Institutional confidence in the US is again called into question.”Some observers recall the era when the Fed’s inner workings were shrouded in mystery and public appearances by the chair were rare, choreographed affairs. Now, with live-streamed statements and criminal investigations making headlines, transparency is not in short supply—though the sense of uncertainty arguably is.Congress is now watching as closely as the rest of us. The stakes: potentially more than just one leader’s reputation or the price tag on a historic building. How this conflict unfolds could shape the nation’s sense of how government should function when ambition, policy, and oversight all meet in the same ornate marble halls.