Last Friday, the United States Department of Justice raised the threat of criminally indicting Federal Reserve Chairman Jerome Powell by issuing subpoenas related to Powell’s June 2025 congressional testimony about renovations of Federal Reserve buildings. Within 72 hours, Powell appeared to have effectively quashed an unprecedented act of lawfare against him. He succeeded by acting swiftly and decisively—both in public and in private.
The public-facing element of Powell’s response was a concise 285-word statement issued as a press release and direct-to-camera video statement that was published around 7:30 p.m. Sunday. Powell expressed “deep respect for the rule of law” and cut to the heart of the matter when he said that questions over his congressional testimony about building renovations were pretextual: “This unprecedented action should be seen in the broader context of the administration’s threats and ongoing pressure” to get the Fed to lower interest rates.
Privately, Powell was working the phones on Sunday and Monday—placing calls to key U.S. senators who had the constitutional power to block any new Trump nominee to serve on the Federal Reserve when the time comes. (Powell’s term as chairman is set to expire in May, but his term on the seven-member board of governors in charge of the Fed ends in 2028 unless he leaves—or is removed—from his post before then). “He reached out Monday morning. We talked for 10-12 minutes,” Alaska Sen. Lisa Murkowski told The Dispatch in the Capitol on Tuesday. Murkowski, a Republican, said she had been tipped off over the weekend that the investigation was going to be announced, and she “appreciated the fact that I was able to speak directly with him and to hear from his perspective.” Maine GOP Sen. Susan Collins told The Dispatch that she spoke to Powell on Sunday night. “I’ve known him for some time, and I believe that he’s a person of integrity,” Collins said.
North Carolina GOP Sen. Thom Tillis declined to say if he had spoken directly with Powell. “I never talk about who I talk [with] in this sort of thing,” Tillis told The Dispatch. But there’s strong circumstantial evidence that Tillis had been privately briefed on the matter before Powell’s statement went public. Within 20 minutes of Powell’s statement going live, Tillis issued his own strong statement attacking the Trump administration for “pushing to end the independence of the Federal Reserve” and personally vowing to oppose “the confirmation of any nominee for the Fed—including the upcoming Fed Chair vacancy—until this legal matter is fully resolved.”
“Tillis was absolutely critical,” Jason Furman, former chair of the Council of Economic Advisers under President Barack Obama, told The Dispatch. “Once he said that, to me it seemed like this had all backfired.”
As a member of the Senate banking committee currently divided between 13 Republicans and 11 Democrats, Tillis alone has the power to block any Fed nominee from advancing out of committee. In a Senate divided 53-47, Tillis, who doesn’t plan to run for reelection this year, also likely provides an essential fourth GOP vote blocking any action on Fed nominees before the full Senate: During Trump’s second term, Sens. Murkowski, Collins, and Mitch McConnell of Kentucky have been willing to vote no on confirming some of Trump’s most controversial nominees, but the fourth GOP vote necessary for rejecting a controversial Trump nominee has been elusive.
While Powell played a savvy game to privately win the support of U.S. senators, much support for Powell emerged organically after his statement went public. On Monday, every living former Fed chair and a bipartisan array of former treasury secretaries and top government economists published a statement on Substack that said the “reported criminal inquiry into Federal Reserve Chair Jay Powell is an unprecedented attempt to use prosecutorial attacks to undermine that independence [of the Fed]. This is how monetary policy is made in emerging markets with weak institutions, with highly negative consequences for inflation and the functioning of their economies more broadly. It has no place in the United States whose greatest strength is the rule of law, which is at the foundation of our economic success.”
The signatories learned of the subpoenas after Powell issued his statement Sunday evening, according to a source familiar with the matter, and Furman circulated a first draft of the group’s statement, with about half weighing in with edits and comments. The signatories had previously filed an amicus brief in defense of Lisa Cook, the Fed governor whom Trump is trying to fire over alleged mortgage fraud (which Cook denies).
By Monday, the Trump administration was backpedaling. Treasury Secretary Scott Bessent told Trump that the investigation had “made a mess” and could harm financial markets, according to Marc Caputo of Axios. Jeanine Pirro, the former Fox News host who issued the Powell subpoenas in her current role as United States attorney for the District of Columbia, posted a defensive statement on Twitter:
The United States Attorney’s Office contacted the Federal Reserve on multiple occasions to discuss cost overruns and the chairman’s congressional testimony, but were ignored, necessitating the use of legal process—which is not a threat.
The word “indictment” has come out of Mr. Powell’s mouth, no one else’s. None of this would have happened if they had just responded to our outreach.
This office makes decisions based on the merits, nothing more and nothing less. We agree with the chairman of the Federal Reserve that no one is above the law, and that is why we expect his full cooperation.
Powell’s pushback has been so effective not just because the case against him appears flimsy and his response has been savvy, but because he is an extraordinarily powerful person whose words can move markets. Arizona GOP Rep. David Schweikert, chairman of the congressional Joint Economic Committee, said he was concerned about the investigation because it could harm the U.S. economy. “Tiny stresses in the debt market are very expensive,” Schweikert told The Dispatch. “Stability is absolutely paramount.”
So Powell’s precise choice of words and strategy have mattered a lot. It’s not hard to imagine a different response—in which Powell said nothing or insisted that when the facts emerged every word of his testimony would be vindicated—that could have had a more negative impact on financial markets. By cutting to the chase that the investigation of him was pretextual—an argument a wide array of congressional Republicans buy—it’s less likely that a potential drip, drip, drip of new information will matter much.
Rep. Anna Paulina Luna of Florida, a Trump loyalist, made a criminal referral to the Department of Justice in 2025 over what she alleged were false statements and perjury committed by Powell in a Senate hearing about the Fed buildings’ renovations. “There’s no VIP dining room, there’s no new marble … there are no special elevators, just old elevators that have been there; there are no new water features, there’s no beehives, and there’s no roof terrace gardens,” Powell told the Senate. Luna wrote in her criminal referral to the DOJ that “nearly all of those assertions—excluding the beehives—are contradicted by the actual project plans.” She told reporters Monday evening: “I’m happy that they’re following up on that.”
But Powell is a central banker—not an interior decorator—and for many Republicans in Congress any potential discrepancies over his statements about renovations are almost beside the point.
“I don’t know about the exact issues with this remodel with the rebuild and the details of it,” Murkowski told The Dispatch on Tuesday, “but it just kind of seems that they’re looking to find something.” Murkowski said in a statement on Monday that “if the Department of Justice believes an investigation into Chair Powell is warranted based on project cost overruns—which are not unusual—then Congress needs to investigate the Department of Justice.”
Kentucky GOP Sen. Rand Paul said he thought the Fed “abused their spending,” but he nevertheless sees the subpoenas of Powell as lawfare. “I think that lawfare—weaponization of the legal system—is awful,” Paul told The Dispatch on Tuesday when asked about the Powell subpoenas.
Paul likened lawfare against Powell to what he described as “unconscionable” weaponization of government that had been directed by Democrats—such as New York Attorney General Letitia James—at Donald Trump. “I still criticize what they did to Donald Trump, but the answer isn’t then doing it back to your enemies,” Paul said. “The answer is pointing out how terrible it is and then … treat[ing] people objectively, according to the law.”
In acting as he did, Powell may have created a blueprint for defending against future attempts to undermine the independence of the Fed. “Powell has handled this stunningly well,” Furman told The Dispatch. “You’re not taught how to do this in central banker school.”
“It’s not just what he did on Sunday, it’s what he didn’t do until Sunday,” Furman added. Despite Trump’s very public attacks and calls for Powell to cut interest rates, Powell “had not taken the bait. He had said very, very little about this, and that made when he eventually did say something that much more powerful.”
Furman observed that, before Powell’s remarks, perhaps the most important speech made by a central banker in the last 25 years was European Central Bank President Mario Draghi’s 2012 speech vowing to do whatever it takes to preserve the euro. “That was very impressive, very important, but also sort of straight out of textbook central banking, which is, in a panic, you make a speech and you promise to do a lot and hope you don’t need to do a lot, because the promise itself works,” Furman said. “Jay Powell just wrote a whole new chapter in the book that future central bankers will be studying on how to deal with these types of assaults.”
