DOJ's Criminal Probe of Fed Chair Not Going Over Well

Senate Republicans are lining up behind Jerome Powell, supporting the Fed chair in the face of a Justice Department probe. GOP senators are sharply questioning the criminal investigation into Powell's congressional testimony about renovation costs at the Fed's headquarters, warning it risks undermining the central bank's independence and unsettling markets, the Wall Street Journal reports. Senate Majority Leader John Thune said he hadn't seen the underlying evidence but insisted any allegations "better be real and … serious," and urged a rapid resolution so monetary policy can proceed "without political interference."

The investigation—launched with grand jury subpoenas over Powell's 2024 testimony that the Fed received Friday—comes as his term as chair expires in May and as he openly accuses the Trump administration of using the threat of indictment to force lower interest rates. That allegation has turned the normally careful institutional relationship between the White House and the Fed into open conflict. While some Republicans remain critical of Powell's policy record, senators across the party said they doubt he broke the law. Senate Banking Committee members Kevin Cramer, Cynthia Lummis, and Dave McCormick all faulted Powell's handling of the renovation issue but said they did not see criminal behavior.

The political stakes are already spilling into the confirmation process for Powell's eventual successor. Sen. Thom Tillis, another Republican on the Banking Committee, vowed to block any Fed nominee until the probe is resolved, a stance that could deadlock the panel. Alaska Sen. Lisa Murkowski called the investigation an effort to "intimidate, threaten, and coerce" the Fed and warned that losing central bank independence would damage financial stability. Democrats, for their part, say that moment may have already arrived: Senate Minority Leader Chuck Schumer called the probe "a brazen attempt" by President Trump to erode the Fed's autonomy. The AP reports that there's a growing consensus the DOJ move may ultimately backfire, making Trump less likely to get what he wants from the Fed.

Attorney General Pam Bondi has declined to discuss the specifics of the case, saying only that she has directed prosecutors to focus on possible misuse of taxpayer funds. Trump told NBC News he was unaware of the subpoenas and denied any link between the probe and his longstanding disputes with Powell over interest rates. If no successor is confirmed by mid-May, Powell could continue to lead the central bank as "chair pro tempore," a temporary status that has been used several times in past Fed transitions, but only twice when an incumbent chair's term ended before the president's new nominee was confirmed by the Senate. This is the first time a sitting Fed chair has been the target of a criminal probe. Sources tell NBC News the investigation began late last year. (Former Federal Reserve chiefs are also issuing warnings about the DOJ probe.)