DOJ probe into Powell prompts bipartisan backlash

Following Federal Reserve Chair Jerome Powell’s disclosure on Sunday that the Department of Justice (DOJ) has issued grand jury subpoenas to the central bank, the investigation has triggered political backlash on Capitol Hill.

Sen. Thom Tillis (R-N.C.), a member of the Senate Banking Committee, said he backs Powell and accused the DOJ of threatening the Fed’s independence. Tillis wrote on social media platform X that he will oppose the confirmation of any Fed nominee, including a new chair, until the investigation is resolved.

“If there were any remaining doubt whether advisers within the Trump Administration are actively pushing to end the independence of the Federal Reserve, there should now be none. It is now the independence and credibility of the Department of Justice that are in question,” Tillis wrote.

The criminal investigation involving Powell is tied to his Senate testimony in June 2025 about cost overruns for renovations to the Fed’s headquarters. No charges have been announced, but a criminal indictment is possible.

In a video posted Sunday on the Fed’s website, Powell said the renovation issue is a pretext and that the investigation is aimed at undermining the Fed’s independence, particularly its ability to set interest rates without political pressure.

“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,” Powell said.

President Donald Trump has repeatedly criticized Powell for not cutting rates more aggressively. Trump has said that after Powell’s term as chair expires in May, he plans to replace him with someone more willing to lower rates.

Powell isn’t required to leave altogether; he could remain on the Fed’s board of governors until his term expires in 2028. While past chairs have typically stepped down from the board, Powell could opt to remain, potentially hindering Trump’s ability to remake the central bank.

Democrats also raised concerns. Sen. Elizabeth Warren of Massachusetts accused Trump of using the DOJ to pressure Powell and gain political control of the Fed, and she also called on the Senate to halt action on Trump nominees to the central bank.

Rep. Maxine Waters (D-Calif.), the top Democrat on the House Financial Services Committee, called the grand jury subpoenas the Trump Administration’s “most reckless escalation yet in its all-out assault on the independence of the Federal Reserve.”

“But let’s be very clear, this is not about transparency, accountability, or Congress’s oversight role as they are claiming,” the statement added. “Federal Reserve Chair Powell has been honest and transparent about the Federal Reserve’s renovation of its historic buildings and made every effort to keep Congress informed. What this latest action is really about is punishing Fed Chair Powell for refusing to bend the knee to Trump’s dangerous and self-promoting political demands, even in the face of Trump’s endless threats and insults.”

Like Warren and Tillis, Waters also urged the Senate to oppose new nominees.

“My colleagues in the Senate would be foolish to rubber-stamp any more of Trump’s Fed nominees that will simply be the President’s ‘yes’ men, and I urge them to oppose any new nominee to the Federal Reserve until these baseless and politically motivated charges are dropped,” Waters said. “Rest assured, I and my Democratic colleagues, will continue to defend the independence of the Federal Reserve, the rule of law, and the integrity of our financial system against any attempt to weaken them for political gain especially against Trump and his Administration.”

While politicians have responded to the news, the mortgage and bond markets have not overreacted. As of Monday at 1:50 pm ET, the 10-year Treasury rate was up 0.002.

Mortgage News Daily reported that although bond yields edged slightly higher in early trading, some commentators incorrectly tied the move to the news.

“There was actually no meaningful movement in either direction when the news hit, but trading volume confirms the news was noticed,” the outlet wrote.