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Trump allies fear that the inquiry into the Fed chair could complicate the process of replacing him this year.
Jan. 13, 2026Updated 5:19 p.m. ET
The investigation of Jerome H. Powell, chair of the Federal Reserve, has prompted fierce blowback from Republicans, international policymakers, Wall Street and some Trump allies, and now threatens to undermine President Trump’s effort to assert dominance over economic decision-making.
The swift and overwhelmingly negative response came after the U.S. attorney in Washington, Jeanine Pirro, informed Mr. Powell her office was initiating a criminal inquiry into the $2.5 billion renovation of the Fed’s headquarters and whether Mr. Powell had lied to Congress about the project.
The backlash is occurring at a time when Mr. Trump has become increasingly emboldened, declaring to The New York Times last week that the only limits on his power are his own “morality.” The Powell inquiry also laid bare some rare dissension within the top ranks of the Trump administration and public opposition from some of the president’s most loyal supporters.
The targeting of Mr. Powell threatens to upend the process of selecting and confirming his replacement in an orderly manner this year, potentially making it more difficult for Mr. Trump to achieve his goal of packing the Fed’s board with members who support substantially lower interest rates.
For months, Bill Pulte, the director of the Federal Housing Finance Agency, has been encouraging Mr. Trump to make Mr. Powell’s handling of the renovation a criminal matter — after making a similar case about other Trump enemies.
When Treasury Secretary Scott Bessent, who is leading the process to find Mr. Powell’s replacement, caught wind of a potential investigation into the Fed chair late last year, he tried to prevent it. He thought he had been successful until last week.
