DOJ Subpoenas Fed Chair Powell; Institutional Independence Crisis Deepens

Fed Independence Under Siege

The Department of Justice has served the Federal Reserve with grand jury subpoenas, threatening a criminal indictment against Chair Jerome Powell. The move, confirmed by Powell in a rare Sunday video statement, marks a kinetic escalation in the administration’s pressure campaign against the central bank. While the subpoenas officially cite testimony regarding building renovations, Powell dismissed the charges as a “pretext” for political retribution over interest rate policy.

The Renovation Vector

Prosecutors are targeting Powell’s June 2025 testimony before the Senate Banking Committee regarding the $2.5 billion renovation of the Fed’s Washington headquarters. The DOJ alleges discrepancies in cost reporting. Powell directly countered this narrative Sunday, stating the investigation is “not about the renovation of Federal Reserve buildings” but rather “a consequence of the Federal Reserve setting interest rates based on our best assessment.”

This is about whether the Fed will be able to continue to set interest rates based on evidence… or whether instead monetary policy will be directed by political pressure or intimidation. Jerome Powell

Political Fallout & Market Nerves

The administration’s aggression has triggered immediate legislative gridlock. Senator Thom Tillis (R-NC) announced he would block all future Fed nominees until the legal matter resolves, explicitly questioning the DOJ’s credibility. President Trump denied prior knowledge of the probe but critiqued Powell’s performance, noting he is “not very good at building buildings.”

Markets face a liquidity test as the trading week opens. Institutional uncertainty is peak. Bitcoin, typically a hedge against monetary debasement, wobbled as traders assessed whether the erosion of Fed independence signals inflation or a deflationary policy error.