Federal Reserve Chair Jerome Powell released a highly unusual weekend video message to announce that the Department of Justice served the nation’s central bank with grand jury subpoenas, signaling a criminal investigation targeting the Fed and specifically Powell. It’s the sort of response one would expect from a national leader responding to an unprovoked attack by a rogue state, which — under the circumstances — might be the appropriate aesthetic for the moment.
Powell’s statement explains that the DOJ is probing Powell’s June testimony to the Senate Banking Committee, covering cost-overruns in the renovation of Federal Reserve buildings. Blasting the cost of the Fed renovations has taken on totemic power among Trump and his allies as they search for a reason to punish the central bank for refusing to slash interest rates given the country’s dodgy economic outlook. A spokesperson for Attorney General Pam Bondi said the department wants to “prioritize investigating any abuse of taxpayer dollars.” The Director of the FBI is using a taxpayer jet for date nights and Kristi Noem dropped $200 million on private jets during the shutdown. Abuse of taxpayer dollars? Girl, the call is coming from inside the house.
For what it’s worth, the Fed’s expensive renovation is due in part to the Trump administration’s demand that they junk the original, modern design plans to match Trump’s preferred Saddam-Hussein-palace aesthetic. On top of that, the Fed had to deal with heavy cost spikes in raw materials because some idiot jacked up tariffs on construction materials.
By complying with Trump’s first term design demands, Powell’s now facing possible criminal charges from Trump’s second term. It’s technically an unprecedented development, but completely unsurprising from a guy who built his financial empire by running businesses into the ground and leaving everyone else holding the bag. Powell’s learning what all those USFL owners did back in the 80s, but the stakes this time — the fate of the global economy — are considerably more grave than allowing the NFL to become the unholy monopoly forcing us to subscribe to every streaming service so we can wake up at 9 a.m. to watch 2-10 teams play in Dusseldorf.
This is what it looks like when the Department of Justice stops even pretending it’s a law-enforcement agency and just becomes the President’s personal law firm. As midterms loom, Trump desperately wants an interest rate cut to juice the stagflating economy and his Department of Justice is leveraging the criminal justice system to intimidate the Fed to make the change over its best judgment by turning Groutgate into a federal crime.
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Trump, naturally, denied any knowledge of the investigation while simultaneously taking the opportunity to remind everyone that Powell is “certainly not very good at the Fed” and “not very good at building buildings.” Trump’s decision to demolish the East Wing and put in the world’s most hideous ballroom has already gone 100 percent over budget.
These potential charges follow Trump’s prior effort to fire Fed governor Lisa Cook. That move now sits with the Supreme Court, whose conservative majority is trying very hard to create a “Federal Reserve exception” to its broader project of turning independent agencies into presidential sock puppets. The conservative majority wants Trump to run roughshod over the administrative state right up until it nukes their own retirement funds. They hoped to drop not-so-subtle hints to stop the administration, but subtlety isn’t the strong suit of a guy with a gold-plated toilet.
But if the Supreme Court wants to pretend it can protect the Fed with a bespoke exception about why it’s “unique,” while also bulldozing every other independent agency, it should be prepared for the obvious response: the White House doesn’t care. If they won’t let Trump fire governors at will, he’s willing to use the DOJ to manufacture bogus criminal charges to secure the “for cause” excuse he would need in any event.
Powell continues:
This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings. It is not about Congress’s oversight role; the Fed through testimony and other public disclosures made every effort to keep Congress informed about the renovation project. Those are 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.
One expert speaking with CNBC characterized the investigation of Powell as “the Maduro option,” an ominous comparison after the administration used a federal indictment as justification for killing somewhere between 40-80 people to depose the head of a sovereign nation. Reportedly, the administration hoped to use the threat of criminal prosecution to convince Maduro to walk away.
Having scored a big win following that playbook, they may well be trying to implement this model at home. By drawing monetary policy lessons from Sicario, the administration hopes to make every governor internalize the threat, so they don’t deliberate based on inflation, employment, or evidence, but based on what will keep Pam Bondi’s DOJ out of their inbox.
Even Republicans recognize this real-time erosion of the rule of law. Senator Thom Tillis, who is retiring and therefore allowed to drop the act and be honest — says he’ll block Fed nominations until this gets resolved. “It is now the independence and credibility of the Department of Justice that are in question,” Tillis said, even though it’s been “now” for a year at this point.
But as much as it’s a signal to the Federal Reserve, it’s also a signal to the Supreme Court. Trump isn’t going to wait to find out if Humphrey’s Executor survives or if some Drunk History about the Second Bank of the United States shields the Federal Reserve. This administration isn’t interested in what the Court’s going to decide — so they might as well just give him what he wants anyway. If there are any genuine “institutionalists” left on the Court, do you want to let Trump fire Powell at will or do you want to force him to drag Powell up on charges first? Is that a predicament that might convince a justice to just give in?
If there’s any positive from Powell’s announcement, it’s that the grand jury convened by the DOJ is likely centered in Washington D.C. and citizens of the capital have proven repeatedly that they’re willing to refuse to indict a garbage charge and more than willing to reject any nonsense that does reach trial.
Joe Patrice is a senior editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter or Bluesky if you’re interested in law, politics, and a healthy dose of college sports news. Joe also serves as a Managing Director at RPN Executive Search.
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