Federal prosecutors are said to have opened inquiry into Fed Chair Powell

WASHINGTON – The US attorney’s office in the District of Columbia has opened a criminal investigation into Mr Jerome H. Powell, the Federal Reserve chair, over the central bank’s renovation of its Washington headquarters and whether Powell lied to Congress about the scope of the project, according to officials briefed on the situation.

The inquiry, which includes an analysis of Powell’s public statements and an examination of spending records, was approved in November by Ms Jeanine Pirro, a longtime ally of US President Donald Trump who was appointed to run the office in 2025, the officials said.

The investigation represents the opening of a major new legal front against Mr Powell, whom Mr Trump has continually attacked for resisting his demands to slash interest rates significantly.

The president has threatened to fire the Fed chair
– even though he nominated Mr Powell for the position in 2017 – and raised the prospect of a lawsuit against him related to the US$2.5 billion (S$3.2 billion) renovation, citing “incompetence”.

Mr Trump told The New York Times in an interview last week that he had decided on who he wants to replace Mr Powell as Fed chair. He is expected to soon announce his decision.

Mr Kevin A. Hassett, Mr Trump’s top economic adviser, is a front-runner for the top job. While Mr Powell’s term as chair ends in May, his term as a governor runs through January 2028. Mr Powell has not disclosed whether he plans to stay on at the central bank beyond 2025.

The Fed declined to immediately comment. A Justice Department spokesperson did not respond to a request for comment.

The US attorney’s investigation into Mr Powell underscores Mr Trump’s larger clash with the Fed. Other broadsides have included an effort to oust Ms Lisa D. Cook, a governor at the central bank whom Mr Trump tried to fire over allegations of mortgage fraud.

Presidents are able to remove officials at the Fed only for “cause,” which has typically meant malfeasance or a dereliction of duty. The Supreme Court will hear arguments for Ms Cook’s case on Jan 21.

Congress granted the Fed the authority to set interest rates free of meddling from presidents, whose political fortunes are often tethered to how the economy is faring. Rather, lawmakers stipulated that the central bank should pursue low, stable inflation and a healthy labour market.

It is not clear whether Ms Pirro has convened a grand jury or issued subpoenas. But prosecutors in her office have contacted Mr Powell’s staff multiple times to request documents about the renovation project, according to an official with knowledge of the investigation who discussed an open inquiry on the condition of anonymity.

Starting an investigation is one thing, presenting sufficient evidence to secure an indictment from a federal grand jury – or making it stick – is another.

Indictments against two of Trump’s top targets, the former FBI director James B. Comey and Ms Letitia James, the New York attorney general, were thrown out in November by a federal judge. An investigation into Senator Adam B. Schiff, Democrat from California, has yet to yield enough evidence to present to a grand jury.

The renovations at the center of the investigation into Powell broke ground in 2022 and are set to be completed in 2027. They are estimated to be about US$700 million over budget. The project involves expanding and modernising the Marriner S. Eccles Building and another building on Constitution Avenue, which date to the 1930s.

The Fed has said that neither of those buildings has been “comprehensively renovated” since their construction nearly 100 years ago, suggesting they were in need of a significant overhaul. Part of the project includes removing asbestos and lead contamination as well as making the facilities compliant with laws related to accessibility for people with disabilities.

A 2021 version of the Fed’s proposal described private elevators and dining rooms for top policymakers, water fountains and new marble features, in addition to a rooftop terrace for staff. Pressed at a congressional hearing in June, Powell denied that many of those features were part of the latest proposal.

“There’s no VIP dining room; there’s no new marble,” he said. “We took down the old marble, we’re putting it back up. We’ll have to use new marble where some of the old marble broke. But there’s no special elevators. There’s just old elevators that have been there.”

Mr Powell added that the project’s plans had “continued to evolve” and that some features that had been initially incorporated were scrapped.

After Mr Powell’s testimony, the Fed published a “Frequently Asked Questions” post on its website that reaffirmed Mr Powell’s answers to lawmakers. The central bank continued to share additional details, including a virtual tour as well as photographs and annotations to the 2021 proposal that prompted the criticism.

In explaining the cost overruns, the central bank cited expenses tied to materials, equipment and labour as well as unforeseen circumstances, such as more asbestos than anticipated and soil contamination. NYTIMES