The ongoing criminal investigation into Federal Reserve Chair Jerome Powell is not merely about cost overruns or testimony. It represents a calculated move by President Donald Trump to seize control of the United States' central bank, sending a clear warning to whoever succeeds Powell about the consequences of independence.
The Real Target: Federal Reserve Independence
Since his return to power a year ago, President Trump has systematically challenged institutions meant to operate independently. He has fired Democratic members of agencies like the Federal Trade Commission against legal advice, removed career officials in justice and defense, and overstepped congressional spending authority. The Federal Reserve, designed by law and tradition to be free from political pressure on interest rates, remained a notable holdout.
Trump, however, has publicly rejected this independence. He believes the president should influence interest rates, a view shared by many in his administration who see Fed autonomy as conflicting with executive authority. Although Trump appointed Powell during his first term, he became frustrated last year when Powell resisted deeper rate cuts, partly due to inflation fueled by tariffs.
A Blueprint for Control: From Lisa Cook to Jerome Powell
With the Supreme Court indicating it would block the firing of a Fed governor without cause, Trump has sought to create that cause. In August, he attempted to remove Governor Lisa Cook over alleged mortgage application issues, which she denied. His stated goal was to install a loyalist and gain a majority on the seven-member Board of Governors, which sets rate policy alongside Reserve Bank presidents.
The current probe into Powell, initiated by Trump ally and Federal Housing Finance Agency Director Bill Pulte, focuses on renovations at the Fed's headquarters. The Department of Justice is examining Powell's congressional testimony on the project. Powell calls this a pretext for his refusal to bend to Trump's wishes, a charge Trump denied to NBC News on Sunday, January 11, 2026.
Fed historian Mark Spindel notes the administration's ambition extends beyond rates. "Trump wants not just lower rates, but control of the board," he said, adding that Treasury Secretary Scott Bessent and Trump seek sweeping changes to bank supervision and market interventions.
A Chilling Message for the Next Fed Chair
The investigation's ultimate audience is Powell's likely successor, either Trump adviser Kevin Hassett or former Fed governor Kevin Warsh. Both have pledged independence, but the administration's actions against Powell serve as a powerful incentive to align with Trump's desires. The message is unambiguous: defy the president, and your professional history and statements will be scrutinized for grounds for removal.
This tactic appears disproportionate. Federal projects, including Trump's own, commonly exceed budgets. The cost of a White House ballroom doubled to $400 million, and the border wall's funding surpassed $60 billion after an initial $8-12 billion estimate. Prosecutions for misleading Congress are rare, especially against an administration's own appointees, requiring proof of a "knowingly and willfully" made material falsehood.
While it's uncertain if Powell will be indicted, the very pursuit signals a determination to break the Fed's independence. Powell's refusal to be intimidated suggests monetary policy may hold for now. However, the long-term damage may already be done. The prospect of relentless investigation raises a critical question: Who would wish to serve? Perhaps only someone prepared to deliver exactly what the White House wants.
