US prosecutors investigate Jay Powell over revamp of Fed headquarters

The Trump administration has served the Federal Reserve with subpoenas over a $2.5bn renovation project of its Washington headquarters. 

Jay Powell, Fed chair, said on Sunday evening that the US central bank had on Friday received grand jury subpoenas and a threat of criminal indictment from the Department of Justice. The legal action related to testimony he had made before the Senate Banking Committee last June regarding the renovation project. 

The administration has used the project, which has run substantially over budget, as a line of attack against the US central bank and Powell, who Trump has labelled a “numbskull” over his refusal to slash interest rates to 1 per cent. 

Powell said on Sunday that the legal action was a pretext to rein in the Fed’s independence to set interest rates as it sees fit. 

“This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings. It is not about Congress’s oversight role; the Fed through testimony and other public disclosures made every effort to keep Congress informed about the renovation project,” the Fed chair said.

“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.” 

This is a developing story