DOJ Issues Subpoenas Linked to $2.5 B Renovation The Department of Justice served subpoenas on the Federal Reserve and warned of a criminal indictment tied to Chair Jerome Powell’s June Senate Banking Committee testimony about a $2.5 billion renovation of two Fed office buildings. The subpoenas specifically target the central bank’s handling of the project and seek records that could support charges. This action represents an unprecedented escalation in the Trump administration’s confrontation with the Fed’s autonomy [1][2].

Powell Calls Charges Pretext to Undermine Independence Powell released a video statement rejecting the DOJ threat as a pretext designed to erode the Fed’s independence. He argued that monetary policy must remain grounded in economic evidence rather than political pressure, and he warned that such legal tactics could set a dangerous precedent. The chair’s remarks echo earlier defenses of central‑bank autonomy and signal a willingness to confront the investigation directly [1][2].

Analysts Warn Market Volatility Amid Political Pressure Financial analysts predict heightened volatility in the dollar, bond, and equity markets as investors reassess the legal and political risks to the Fed’s policy framework. A prominent market commentator warned of a possible sell‑off if the indictment proceeds, citing the unprecedented nature of the probe. Lawmakers from both parties have voiced opposition, suggesting they would block any replacement for Powell until the matter is resolved, while White House adviser Kevin Hassett said he would welcome scrutiny if the DOJ approached him respectfully [1][2].

Trump and Hassett Amplify Political Fight Over Fed President Donald Trump has repeatedly linked the renovation cost overruns to broader criticisms of Powell’s monetary stance, even hinting at a major lawsuit over the project’s budget. Hassett’s public comments framed the issue as a test of institutional independence, reinforcing the administration’s narrative that the Fed is being politicized. The combined political pressure adds to an already contentious environment surrounding Powell’s term, which expires in May, and fuels speculation about a potential successor [1].