Fed Chair Powell says he’s under criminal investigation, won’t bow to Trump intimidation

A DOJ spokesperson, in a statement to CNBC, without saying the comment was about Powell, said, “The Attorney General has instructed her US Attorneys to prioritize investigating any abuse of taxpayer dollars.”

Trump has made no secret of his intention to remove Powell as chair after his term expires in May.

The two leading contenders are believed to be former Fed Gov. Kevin Warsh and Kevin Hassett, the current director of the National Economic Council.

Sen. Thom Tillis, a North Carolina Republican and a member of the Senate Banking Committee, blasted the investigation of Powell and said that he would oppose the nomination of Powell’s replacement by Trump, and any other Fed Board nominee, “until this legal matter is fully resolved.”

“If there were any remaining doubt whether advisers within the Trump Administration are actively pushing to end the independence of the Federal Reserve, there should now be none,” Tillis said in a statement.

“It is now the independence and credibility of the Department of Justice that are in question,” the senator said.

Senate Minority Leader Chuck Schumer, a New York Democrat, said Trump’s “assault on the Fed’s independence continues,” adding that the president is threatening the strength and stability of the U.S. economy.

“This is the kind of bullying that we’ve all come to expect from Donald Trump and his cronies. Anyone who is independent and doesn’t just fall in line behind Trump gets investigated,” he said in a statement. “Jay Powell and the Fed aren’t the reason Trump’s economy and his poll numbers are in the toilet. If he’s looking for the person who caused that he should look in the mirror.”

Sen. Elizabeth Warren of Massachusetts, the ranking Democrat on the Banking Committee, echoed Tillis.

“As Donald Trump prepares to nominate a new Fed Chair, he wants to push Jerome Powell off the Fed Board for good and install another sock puppet to complete his corrupt takeover of America’s central bank,” Warren said in a statement.

“Trump is abusing the authorities of the Department of Justice like a wannabe dictator so the Fed serves his interests, along with his billionaire friends,” Warren said.

“This Committee and the Senate should not move forward with any Trump nominee for the Fed, including Fed Chair.”

Brian Jacobsen, chief economic strategist at Annex Wealth Management, in a note to clients on Sunday, wrote, “President Trump is trying to bring criminal charges against Powell related to his testimony before Congress about the Fed’s headquarters renovation.”

“Powell may protest by staging a sit-in. His term as Chair is up in May, but his term as a governor isn’t up until January 2028,” Jacobsen wrote.

“With the political pressure on the Fed, he may choose to stay on as a governor out of spite. It would deprive President Trump of the ability to stack the board with another appointee,” Jacobsen wrote. “Stephen Miran‘s term is up in January 2026 and that may be the only vacancy Trump gets to fill. It would be unconventional for Powell to stay on, but everything these days is unconventional.”

Trump nominated Powell to the Fed chair position in 2017; he was confirmed in 2018.

But almost from the onset of Powell’s term, Trump has repeatedly badgered the Fed chair about interest rates.

At various times, Trump has called Fed officials “boneheads” and once referred to Powell as a golfer who cannot putt.

Those criticisms intensified during Trump’s second term, as he hectored the central bank to cut rates for months, even after it implemented three consecutive quarter-percentage-point reductions beginning in September.

During that time, Trump installed his handpicked choice, Miran, as a Fed governor and has sought to remove another governor, Lisa Cook, from the board over allegations that she committed mortgage fraud.

Cook denies those claims, which were made in the form of criminal referrals to the DOJ by Federal Housing Finance Agency Director Bill Pulte, who has been an attack dog against perceived enemies of Trump, who appointed Pulte to his post.

The Supreme Court is set to hear arguments on a case challenging Cook’s removal later in January.

Krishna Guha, vice chairman of Evercore ISI and head of its Global Policy and Central Bank Strategy Team, in a note to clients on the probe of Powell, said, “We are stunned by this deeply disturbing development which came out of the blue after a period in which tensions between Trump and the Fed seemed to be contained.”

“We expect the dollar, bonds and stocks to all fall in Monday trading in a sell-America trade similar to that in April last year at the peak of the tariff shock and earlier threat to Powell’s position as Fed chair, with global investors applying a higher risk premium to US assets,” Guha said. “Gold and other safe havens should rally.”

— CNBC’s Jeff Cox, Eamon Javers, and Garrett Downs contributed to this article

Article source: https://www.cnbc.com/2026/01/12/fed-jerome-powell-criminal-probe-nyt.html