Wall Street was rocked early Monday after federal prosecutors opened a criminal investigation into Federal Reserve Chair Jerome Powell — rattling investors and igniting fears of political interference at the central bank.
Dow futures tumbled more than 350 points in premarket trading, with the blue-chip contract down 357 points, or 0.72%, while S&P 500 futures slid 39.75 points, or 0.57%, and Nasdaq futures sank 201.25 points, or 0.78%, as investors reacted to the Justice Department’s move against the Fed chair.
Meanwhile, gold surged to record territory as investors piled into safe havens, with spot prices jumping about 2% to around $4,595 an ounce after briefly touching $4,600, while US gold futures for February delivery climbed more than 2% to roughly $4,606.
The US Attorney’s Office for the District of Columbia has opened a criminal probe into Powell over his June 2025 testimony to Congress about the scope and cost of the Federal Reserve’s $2.5 billion renovation of its Washington, DC headquarters, officials familiar with the matter told the New York Times.
Last April, The Post was first to report that the Fed was moving forward with extensive renovations as part of a $2.5 billion overhaul of the Marriner S. Eccles Federal Reserve Board Building on the corner of 20th St. and Constitution Ave. — despite being more than $700 million over budget.
The newly announced probe was approved in November by Jeanine Pirro, the Trump ally tapped to run the US attorney’s office last year, and includes a review of Powell’s public statements and an examination of the Fed’s internal spending records, according to officials briefed on the investigation.
Powell confirmed late Sunday that the Justice Department had served the Fed with grand jury subpoenas and warned that prosecutors were threatening a criminal indictment tied to his testimony, calling the move an unprecedented attack on the central bank.
He said the investigation was politically motivated retaliation for the Fed’s refusal to bow to White House pressure to slash interest rates, arguing the threat of prosecution was meant to intimidate policymakers into aligning monetary decisions with President Trump’s demands.
“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 in a statement reacting to the investigation on Sunday.
“I have served at the Federal Reserve under four administrations, Republicans and Democrats alike,” the central bank chief added.
“In every case, I have carried out my duties without political fear or favor, focused solely on our mandate of price stability and maximum employment.”
The Post has sought comment from the White House and the Justice Department.
Powell, a former private-equity executive and Washington lawyer, was first nominated to lead the Federal Reserve by Trump in 2017 and confirmed by the Senate the following year, inheriting an institution designed to operate independently from the White House.
While his term as chair expires in May 2026, his seat as a Fed governor runs through January 2028, allowing him to remain at the central bank unless removed for cause.
Since returning to office, Trump has repeatedly clashed with Powell over interest rates, publicly accusing him of incompetence and threatening to fire him for refusing to slash borrowing costs despite inflation falling below 3%.
Trump has said he already has a replacement in mind and has floated legal action tied to the Fed’s headquarters renovation as part of his broader pressure campaign.
The $2.5 billion project broke ground in 2022 and is funded entirely by the Fed through interest income and fees, not congressional appropriations or taxpayer dollars.
Planning documents from 2021 included features such as private dining rooms, special elevators, water features, marble upgrades and a rooftop terrace, though Powell later told lawmakers many of those elements were scrapped as plans evolved.
The Fed has said cost overruns — now estimated at roughly $700 million — stem from inflation, labor and materials costs, asbestos and lead removal, soil contamination and upgrades required to meet modern safety and accessibility standards.
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