Federal Reserve Chairman Jerome Powell confirmed in a video statement Sunday that the U.S. Department of Justice had opened a criminal investigation centered on testimony he gave about a $2.5 billion renovation of its Washington, D.C. headquarters that has gone far over budget.
Work on the project began several years ago and includes structural improvements, modernization of facilities, and enhancements to security and operational efficiency. The Federal Reserve has described the renovations as necessary to maintain the functionality and safety of its headquarters, which houses critical operations for the nation’s central banking system.
During a June 2025 appearance before the Senate Banking Committee, Powell addressed questions about the project’s expenses and timeline, claiming that the costs were justified and transparently managed.
According to details from the investigation, federal prosecutors are reviewing Powell’s public statements, congressional testimony, and internal spending records related to the renovation. The inquiry was reportedly approved in November 2025 by U.S. Attorney Jeanine Pirro, who oversees the District of Columbia office.
On Friday, the DOJ served the Federal Reserve with grand jury subpoenas, which included threats of potential criminal indictment tied to Powell’s June testimony. Officials familiar with the matter indicate that the focus is on determining if any misrepresentations occurred regarding the project’s details.
In response, Powell released a video statement on the evening of January 11, 2026, via the Federal Reserve’s official channels. In the message, he described the investigation as “unprecedented” and claimed he was being targeted for political reasons.
Powell stated that the Federal Reserve would cooperate fully with the inquiry while continuing its mandate to promote maximum employment, stable prices, and moderate long-term interest rates. He also noted that the renovation project has been subject to regular audits and oversight, with all expenditures documented in accordance with federal guidelines.
The investigation occurs amid ongoing discussions about the Federal Reserve’s independence and its role in economic policy. The supposedly non-partisan central bank has faced scrutiny over its handling of interest rates, inflation, and other monetary tools in recent years.
The process may involve reviewing thousands of documents, interviewing witnesses, and analyzing financial records. If charges were to be filed, they could potentially include allegations related to false statements to Congress, though no such charges have been announced at this time.
No definitive statements on the case have been released by the Justice Department as of this report, in line with longstanding department policy of not commenting on active investigations.
The Federal Reserve’s headquarters renovation has been a point of public interest due to its scale and taxpayer implications, as the central bank’s operations are funded through its earnings rather than direct appropriations. Back in July, U.S. Rep. Anna Paulina Luna (R-FL) filed a criminal referral based on Powell’s testimony before congress.
The Fed’s renovations date back to 2017 when its Board of Governors approved the massive project, “subject to annual budget approval by the Board since then.” The agency’s website states that the Board’s independent Office of Inspector General has had “full access to the project information on costs, contracts, schedules, and expenditures and receives monthly reports on the construction program.”
However, since the renovation was initially projected to cost $1.9 billion, it has since ballooned by about $700 million, alarming fiscal conservatives who question whether the nation’s central bank is capable of managing its own in-house affairs.
The Fed attributed the price increase to the rising cost of steel and cement used in construction, as well as other materials used to perform work underground.
