DOJ Criminal Probe Targets Fed Chair Powell; Gold Hits Record as Dollar Slips
Fed Chair Powell confirms a DOJ subpoena over renovation testimony, sparking a constitutional standoff that sent Gold to all-time highs and the Dollar lower.
The Receipt
The conflict between the White House and the Federal Reserve escalated to a constitutional crisis Sunday. Fed Chair Jerome Powell confirmed the central bank received a Justice Department subpoena Friday threatening a criminal indictment over his congressional testimony regarding the $2.5 billion headquarters renovation.
Markets reacted immediately to the threat against the Fed’s independence. The U.S. Dollar Index (DXY) slid 0.2% at the open. Capital fled to hard assets: Gold and Silver pushed to fresh all-time highs, while S&P 500 futures retraced 0.5%.
The “Cause” Vector
The investigation centers on whether Powell misled Congress about the costs of renovating the Mariner S. Eccles building. The project, budgeted at $2.5 billion, has been a focal point for the administration’s pressure campaign. Under the Federal Reserve Act, the President can only remove a governor for “cause.” A criminal indictment regarding legislative testimony would provide that legal pretext where policy disagreements do not.
Powell did not mince words regarding the timing.
“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.”
Institutional Context: The Fiat Fracture
For crypto investors, this is the “break glass” moment. The Fed’s autonomy is the primary defense of the dollar’s global reserve status. If the executive branch successfully weaponizes the DOJ to force rate cuts, the firewall between fiscal spending and monetary policy dissolves.
Senator Thom Tillis (R-NC), a member of the Senate Banking Committee, signaled the legislative branch would not capitulate easily. Tillis vowed to block all Fed nominees until the probe is resolved.
“It is now the independence and credibility of the Department of Justice that are in question,” Tillis noted Sunday.
Market Outlook
Short-term liquidity is now hostage to political gridlock. While the “safe haven” bid is currently favoring precious metals, the erosion of institutional trust is historically the strongest macro tailwind for decentralized value transfer protocols. Expect heightened volatility in BTC and ETH as the dollar struggles to find a floor against the political uncertainty.
