Trump’s Department of Justice has launched an unprecedented criminal probe against Federal Reserve Chair Jerome Powell, using subpoenas as a weapon to force the Fed into slashing interest rates and abandoning its constitutional independence.
Story Highlights
- DOJ issued criminal subpoenas to Fed Chair Powell over building renovation testimony, threatening indictment
- Powell calls probe a “pretext” to pressure Fed into rate cuts Trump demands
- Former Fed chairs Greenspan, Bernanke, and Yellen condemn “prosecutorial attacks” on Fed independence
- Stock markets fell as investors fear politicization of monetary policy threatens economic stability
Trump Administration Weaponizes DOJ Against Fed Independence
The Department of Justice served subpoenas to Federal Reserve Chair Jerome Powell on Friday, marking the first time in modern history that criminal prosecution has been threatened against a sitting Fed chair.
The subpoenas target Powell’s June 2025 Senate testimony about a $2.5 billion Fed building renovation project, which Trump previously called “the highest price of construction per square foot in history.”
This escalation follows Trump’s December 29 threat to sue Powell for “gross incompetence,” representing a dangerous departure from the Fed’s constitutional mandate to operate independently from political pressure.
Greenspan, Bernanke, Yellen and other past officials say Trump using 'prosecutorial attacks' to undermine Fed https://t.co/yADzRLwCWj
— CNBC (@CNBC) January 12, 2026
Powell responded Sunday night with a video statement describing the subpoenas as a “pretext” designed to coerce the Fed into abandoning its data-driven approach to monetary policy.
He affirmed his commitment to the Fed’s dual mandate of price stability and maximum employment, declaring that “public service sometimes requires standing firm in the face of threats.”
This direct challenge to executive overreach demonstrates Powell’s refusal to bow to political intimidation tactics that undermine the institutional safeguards protecting American economic stability.
Bipartisan Opposition Emerges as Markets React Negatively
Former Federal Reserve chairs Alan Greenspan, Ben Bernanke, and Janet Yellen joined ex-Treasury Secretaries Henry Paulson, Robert Rubin, Timothy Geithner, and Jacob Lew in condemning the probe as an “unprecedented attempt” with “no place in the United States.”
Their joint statement, posted on Substack Monday, warns of “highly negative consequences for inflation” if monetary policy becomes politicized.
The bipartisan coalition of economic leaders compared Trump’s tactics to “emerging markets with weak institutions,” highlighting how prosecutorial attacks erode central bank credibility and threaten long-term economic stability.
Stock markets fell Monday following Powell’s disclosure, reflecting investor concerns about the precedent being set for political interference in monetary policy. Even Republican Senator Kevin Cramer of North Dakota, a known Powell critic, called for a quick resolution to avoid further market disruption.
The negative market reaction demonstrates how political interference in Fed operations creates uncertainty that damages investor confidence and threatens the economic recovery Trump claims to champion.
Constitutional Principles Under Attack Through Institutional Weaponization
The Federal Reserve’s independence, established in 1913 and reinforced after the inflation crises of the 1970s, serves as a crucial constitutional check against short-term political pressures that historically led to economic disasters.
Trump’s use of criminal prosecution tools to force policy changes represents the same institutional weaponization conservatives have long warned destroys the rule of law. This attack on Fed autonomy mirrors tactics used in authoritarian regimes where prosecutorial power becomes a tool for political control rather than legitimate law enforcement.
Powell’s term as Fed chair expires in May 2026, but he could remain as a board governor until January 2028, potentially blocking Trump’s ability to install a compliant successor. The timing of this probe appears designed to either force Powell’s complete resignation or intimidate him into implementing the aggressive rate cuts Trump demands, regardless of inflationary consequences.
This represents exactly the kind of institutional corruption that undermines constitutional governance and threatens the economic stability that benefits all Americans, particularly working families who suffer most from inflation caused by politicized monetary policy.
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Trump’s legal attack on Powell underscores his aim for full control of Fed
