At a Glance
- President-elect Donald Trump told NBC News he has no knowledge of DOJ subpoenas against the Federal Reserve and Chair Jerome Powell
- Powell claims the subpoenas are retaliation for resisting Trump’s pressure to lower interest rates
- The Fed defends its $2.5 billion renovation as necessary for health and safety after decades of neglect
Why it matters: The clash threatens the Fed’s political independence as Trump prepares to take office.
President-elect Donald Trump says he knows nothing about the Department of Justice serving grand jury subpoenas to the Federal Reserve and its chair, Jerome Powell, even as Powell insists the move is political payback for keeping interest rates high.
Trump, 79, spoke to NBC News on Monday, Jan. 12, after Powell released a video statement the previous day saying the DOJ had threatened him with criminal indictment.
“I don’t know anything about it, but he’s certainly not very good at the Fed, and he’s not very good at building buildings,” Trump told the network.
The subpoenas arrived Friday, Jan. 9, and center on Powell’s June testimony before the Senate Banking Committee defending the Fed’s $2.5 billion renovation of two Washington, D.C., office buildings.
Powell’s Defense
In Sunday’s statement, Powell said the renovation is essential:
- The Eccles and 1951 Constitution Avenue buildings have not been updated since their 1930s construction
- Health hazards include asbestos and lead contamination
- The project is the first major overhaul in nearly a century
“That testimony concerned in part a multi-year project to renovate historic Federal Reserve office buildings,” Powell said.
Trump has previously called the price tag excessive. During the June hearing, Powell argued the work is necessary for employee safety and building preservation.
Political Pressure
Powell linked the DOJ action directly to Trump’s repeated demands for lower interest rates.
“This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings,” Powell said. “It is not about Congress’s oversight role… Those are pretexts.”
“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.”
Trump rejected that characterization.
“No. I wouldn’t even think of doing it that way,” he told NBC News. “What should pressure him is the fact that rates are far too high. That’s the only pressure he’s got.”
White House Construction
The Fed controversy unfolds as Trump pursues his own expensive renovation: a $400 million, 90,000-square-foot ballroom replacing the demolished east wing of the White House complex.
Architect Shalom Baranes told the National Capital Planning Commission the project may require adding an extra story to the West Wing and West Colonnade to maintain visual symmetry around the White House’s central pavilion.
“The reason to think about that is so that we would reinstate the symmetry around the central pavilion of the White House,” Baranes explained.
Fed Independence
Powell emphasized that political interference undermines the central bank’s ability to manage monetary policy effectively.
“This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions – or whether instead monetary policy will be directed by political pressure or intimidation,” he said.
The chair noted he has served under four administrations, both Republican and Democratic, always focusing on the Fed’s dual mandate of price stability and maximum employment.
“I have deep respect for the rule of law and for accountability in our democracy,” Powell said. “No one – certainly not the chair of the Federal Reserve – is above the law. But this unprecedented action should be seen in the broader context of the administration’s threats and ongoing pressure.”
Term Limits
Trump nominated Powell as Fed chair in November 2017. Powell took office February 2018.
His term as chair expires in May, and Trump could name a replacement by month’s end, according to the BBC. However, Powell’s separate position on the Fed’s Board of Governors lasts until 2028.
The White House and Department of Justice did not respond to requests for comment from News Of Losangeles.
A DOJ spokesperson declined to discuss the Fed case specifically but told Reuters: “The Attorney General has instructed her U.S. Attorneys to prioritize investigating any abuse of taxpayer dollars.”
Broader Context
The Fed clash follows Trump’s August attempt to remove Fed Governor Lisa Cook over mortgage fraud allegations she denies. The Supreme Court ruled Cook can remain while litigation continues, with arguments scheduled for Jan. 21.
Powell vowed to continue serving despite pressure.
“Public service sometimes requires standing firm in the face of threats,” he said. “I will continue to do the job the Senate confirmed me to do, with integrity and a commitment to serving the American people.”
The dispute sets up a potential constitutional confrontation over the Federal Reserve’s independence as Trump prepares to return to the White House.
