Federal Reserve Chair Jerome Powell made a striking revelation on Sunday, disclosing that the Trump administration has threatened him with criminal indictment over testimony he provided to Congress last summer. The dramatic announcement represents a significant escalation in the ongoing tensions between the central bank leadership and the White House.

DOJ Serves Grand Jury Subpoenas

Powell revealed that the Department of Justice served the Federal Reserve with grand jury subpoenas on Friday, threatening criminal charges related to his testimony before the Senate Banking Committee in June. The testimony in question concerned a Federal Reserve building renovation project, which Powell described as merely a "pretext" for applying additional pressure on the central bank.

"On Friday, the Department of Justice served the Federal Reserve with grand jury subpoenas, threatening a criminal indictment related to my testimony before the Senate Banking Committee last June," Powell stated in his Sunday announcement.

Escalating Fed-White House Tensions

The current dispute marks a dramatic intensification of the conflict between Powell and the Trump administration that has persisted since Powell's early years as Fed chair beginning in 2018. Powell characterized the administration's actions as an attempt to pressure the Federal Reserve into lowering interest rates, suggesting the building renovation testimony serves as a convenient justification for broader political pressure.

Powell's Response

Despite the unprecedented nature of the threat, Powell emphasized his respect for legal processes and democratic accountability. "I have deep respect for the rule of law and for accountability in our democracy. No one—certainly not the chair of the Federal Reserve—is above the law," he stated in the brief announcement released by the Fed late Sunday.

The Federal Reserve chair's measured response underscores the delicate balance he must maintain between defending the central bank's independence and acknowledging the legitimacy of legal oversight. The White House has not yet responded to requests for comment regarding the situation.

Implications for Federal Reserve Independence

This development raises significant questions about the independence of the Federal Reserve and the appropriate boundaries between executive branch oversight and central bank autonomy. The timing and nature of the DOJ action, particularly its connection to interest rate policy pressure, suggests broader implications for monetary policy decision-making processes.

US stock futures posted significant declines in late Sunday trading after Federal Reserve Chair Jerome Powell announced he is under criminal investigation. The announcement sent shockwaves through financial markets, with major indices futures falling sharply from their opening levels.

Market Response to Powell's Announcement

The market reaction was swift and pronounced across all major indices. The following table shows the futures performance following Powell's statement:

The futures had opened little changed after posting weekly advances, but quickly turned negative following the Federal Reserve Chair's video message.

Powell's Statement and Investigation Details

In a video message posted on the Federal Reserve's official handle on "X", Powell explained that the criminal investigation was initiated as a result of the Fed's approach to interest rate policy. He stated that the probe stems from the Fed setting interest rates based on what they consider their "best assessment of what will serve the public" rather than following the preferences of President Trump.

This development highlights the ongoing tension between the Federal Reserve's independence and political pressures from the executive branch regarding monetary policy decisions.

Succession Planning Underway

With Powell's tenure as Fed Chair scheduled to end in May 2026, the Trump administration has already begun the process of identifying potential successors. According to reports, interviews have been conducted and the list has been narrowed down to three candidates:

The succession process appears to be moving forward despite the current controversy surrounding Powell's investigation.

Market Implications

The announcement comes at a critical time for financial markets, with investors closely monitoring Federal Reserve policy decisions and their potential impact on economic conditions. The criminal investigation adds an unprecedented element of uncertainty to monetary policy expectations and could influence market sentiment in the coming sessions.