How the Trump-Powell relationship blew up, amid DOJ's unprecedented probe

Driving the news: The Department of Justice is conducting a criminal investigation into Powell over his Congressional testimony on the building project, according to a report this weekend that the Fed confirmed.

• The cost of renovating two historic buildings on the National Mall has grown to $2.5 billion, and Powell denied before Congress last June that luxury features were the reason.
• The Fed on Friday received grand jury subpoenas, threatening a criminal indictment, Powell said in a statement.

What they're saying: "No one — certainly not the chair of the Federal Reserve — is above the law," Powell said in a video issued by the Fed.

• "But this unprecedented action should be seen in the broader context of the administration's threats and ongoing pressure," Powell said, calling those threats "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."

The other side: Trump on Sunday told NBC News he didn't "know anything about" the Justice Department's probe.

• Asked whether the subpoenas were related to his desire for lower interest rates, Trump said: "No. I wouldn't even think of doing it that way. What should pressure him is the fact that rates are far too high. That's the only pressure he's got."
• The White House referred a request for comment to the Justice Department, which did not immediately respond.

Context: The Fed cut interest rates three times in the second half of 2025 to protect the weakening labor market.

• Powell has suggested that the central bank might approach cutting rates more cautiously in 2026, however, partially because inflation remains above its 2% target.
• Trump has demanded more aggressive cuts, saying that rates should be at rock-bottom levels — a demand he says the next Fed chair will need to comply with.

Here's what to know about Trump's feud with Powell:

Trump, allies seize on Fed renovations

Between the lines: Trump's appointees are trying to lay out legal predicates to fire Powell for cause — specifically, that the Fed's renovation project has included changes not approved by a federal planning authority, and/or that Powell lied to Congress about the project, Axios' Neil Irwin writes.

• Office of Management and Budget director Russ Vought wrote Powell in July, suggesting the Fed had altered plans approved by the National Capital Planning Commission in 2021, violating federal law.

The Fed's position is that its Board of Governors alone controls its real estate decisions under the Federal Reserve Act, and that its cooperation with the NCPC is voluntary.

• The Fed has also, in a published FAQ over the weekend and other various other points, sought to explain or downplay some of the reported claims around its handling of the project.

Case in point: Trump and his allies have targeted the project for cost overruns and supposed luxury features, which Powell has repeatedly denied.

• "There are no new water features. There's no beehives and there's no roof terrace garden," Powell told Congress last June.

Flashback: Last summer, Powell gave Trump a tour through the renovation of the 1930s Marriner S. Eccles building.

• During the tour, Trump said that the project cost $3.1 billion, not the much-cited $2.5 billion.
• Powell shook his head, and said that the higher number includes a third office building across the street that was completed five years ago.

What's next for the investigation

The latest: The investigation threatens to impact the confirmation process for Trump's future Fed chair pick and other central bank nominees.

• "I will oppose the confirmation of any nominee for the Fed — including the upcoming Fed Chair vacancy — until this legal matter is fully resolved," Sen. Thom Tillis, a North Carolina Republican on the chamber's banking committee, said on Sunday.
• Two other Republicans on the committee, Kevin Cramer and Dave McCormick, issued statements Monday criticizing Powell's record as Fed chair, but saying they did not believe his actions were criminal.

Any Fed official needs to be confirmed by the banking panel before moving on to a full Senate vote.

• Republicans have just a two-seat majority on the Senate Banking Committee. Losing even one Republican could derail a nomination.

What they're saying: Sen. Lisa Murkowski (R-Alaska) issued a statement Monday in support of Tillis' decision, calling the investigation "nothing more than an attempt at coercion."

• Multiple House Republicans have also come out in defense of Powell, including Arkansas Rep. French Hill, chairman of the House Financial Services Committee, who called the investigation "an unnecessary distraction."