US federal prosecutors have opened a criminal inquiry into Federal Reserve Chair Jerome Powell, according to a report by The New York Times. The investigation is being handled by the US Attorney’s Office for the District of Columbia and focuses on a major renovation of the Federal Reserve’s headquarters in Washington, D.C.
Officials familiar with the matter said the inquiry was approved in November by US Attorney Jeanine Pirro. Prosecutors are reviewing Powell’s public statements to Congress and examining spending records linked to the renovation project. Grand jury subpoenas have been issued, and Federal Reserve staff have been contacted for documents.
The renovation project began in 2022 and involves two historic buildings used by the Federal Reserve. Both buildings date back to the 1930s. The work includes large-scale modernization, safety upgrades, and structural repairs. The total estimated cost has risen to about $2.5 billion, which is roughly $700 million over the original budget.
The Federal Reserve has said the buildings had not been comprehensively renovated since they were built nearly a century ago. Officials stated the upgrades were necessary to address aging infrastructure and safety concerns. The project includes removing asbestos and lead, upgrading outdated systems, and making the buildings compliant with laws that require accessibility for people with disabilities.
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Why the renovation became controversial
The renovation drew criticism after planning documents from 2021 described features that some lawmakers viewed as excessive. These documents mentioned private dining areas for senior officials, special elevators, marble features, water fountains, and a rooftop terrace for staff.
During a congressional hearing in June, Jerome Powell denied that many of these features were part of the final renovation plan. He told lawmakers that there were no special dining rooms or luxury upgrades being added. He said old marble was removed and later reinstalled, with new marble used only when original material was damaged.
Powell explained that renovation plans changed over time and that some early design ideas were later removed. After the hearing, the Federal Reserve published a detailed explanation on its website. This included a frequently asked questions section, photos, building annotations, and a virtual tour to clarify what the renovation includes.
The central bank said the cost overruns were caused by rising prices for construction materials, labor shortages, and unexpected problems found during construction. These included larger amounts of asbestos than expected and soil contamination beneath the buildings.
Prosecutors are now reviewing whether Powell’s testimony accurately reflected the project’s scope at the time it was given. Investigators are analyzing records to determine whether any statements to Congress were misleading or false.
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Political tension surrounding the inquiry
The investigation comes amid a long-running conflict between President Donald Trump and the Federal Reserve. Trump has repeatedly criticized Powell for refusing to sharply cut interest rates. He has accused the Fed chair of incompetence and has suggested removing him from office.
Trump has said he has already chosen who he wants to replace Powell as Federal Reserve chair. Kevin Hassett, a top economic adviser, has been named as a leading candidate. Powell’s term as chair ends in May, though his term as a Federal Reserve governor runs until January 2028. Powell has not said whether he plans to remain at the central bank beyond this year.
In a rare video message released on Sunday, Powell addressed the investigation. He described it as unprecedented and questioned its purpose. He said the Federal Reserve made strong efforts to keep Congress informed about the renovation and stated that the inquiry was not about oversight or testimony.
Powell warned that using criminal investigations against the central bank threatens its independence. He said interest rate decisions should be based on economic data, not political pressure.
The Department of Justice, led by Attorney General Pam Bondi, declined to comment on the investigation but said US attorneys are prioritizing cases involving possible misuse of taxpayer funds.
No charges have been filed. The investigation remains ongoing as prosecutors continue reviewing documents, testimony, and spending records related to the Federal Reserve renovation.