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A simmering feud between the Trump administration and the Federal Reserve reached a boiling point this weekend as the administration opened a criminal investigation into Chair Jerome Powell.
What began as a disagreement over interest rate policy has evolved into an unprecedented confrontation, posing the greatest challenge of Powell’s eight-year leadership of the Federal Reserve.
The dispute has now reached Capitol Hill, where congressional Republicans — including some close allies of the Trump administration — are pushing back against the investigation and threatening to block future nominees to lead the world’s most powerful central bank.
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Perhaps the most prominent Republican to join the discourse so far is Rep. French Hill, R-Ark., who chairs the House Financial Services Committee.
Hill recalled his longstanding relationship with Powell, dating back to their time together working at the Treasury Department under then-President George H.W. Bush, and said, “Then, as now, I know Mr. Powell to be a man of integrity with a strong commitment to public service.”
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“Pursuing criminal charges relating to his testimony on building renovations at a time when the nation’s economy requires focus creates an unnecessary distraction,” Hill said. “The Federal Reserve is led by strong, capable individuals appointed by President Trump, and this action could undermine this and future Administrations’ ability to make sound monetary policy decisions.”
Sen. Thom Tillis, R-N.C., was among the first Republicans to sharply criticize the investigation Sunday night, warning it threatened the independence of both the Federal Reserve and the Justice Department.
“If there were any remaining doubt whether advisors within the Trump administration are actively pushing to end the independence of the Federal Reserve, there should now be none,” Tillis wrote on X. “It is now the independence and credibility of the Department of Justice that are in question.”
Tillis added that he would oppose the confirmation of any Federal Reserve nominee — including the next Fed chair — until the legal matter is resolved.
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The warning comes as Trump weighs candidates to succeed Powell, whose term as Fed chair is set to expire in May.
Tillis’s resistance carries particular weight given his seat on the Senate Banking Committee, where any new nominee would be vetted. If he follows through on his threat, it could result in a tied vote on the panel.
That would force a vote in the Senate to move forward with whoever Trump picks and, given the brewing GOP resistance, it would likely fail.
Sen. Lisa Murkowski, R-Alaska, backed Tillis’ move to block any future Fed chair nominee, adding that “the stakes are too high to look the other way: if the Federal Reserve loses its independence, the stability of our markets and the broader economy will suffer.”
After speaking with Powell Monday morning, Murkowski said “it’s clear the administration’s investigation is nothing more than an attempt at coercion.”
“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,” Murkowski said.
Senate Majority Leader John Thune, R-S.D., said that he hadn’t yet “seen the case or whatever the allegations are… But I would say they better be real and serious.”
Sen. Elizabeth Warren, D-Mass., the top ranking Democrat on the Senate Banking Committee, similarly panned the criminal investigation into Powell and charged that Trump sought to “install another sock puppet to complete his corrupt takeover of America’s central bank.”
“Trump is abusing the authorities of the Department of Justice like a wannabe dictator, so the Fed serves his interests, along with his billionaire friends,” Warren said in a statement. “This Committee and the Senate should not move forward with any Trump nominee for the Fed, including Fed Chair.”
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While Sen. Kevin Cramer, R-N.D., stopped short of backing the investigation, he criticized Powell as “a bad Fed Chair who has been elusive with Congress,” particularly over cost overruns tied to renovations of the Federal Reserve’s headquarters.
“I do not believe, however, he is a criminal,” Cramer said. “I hope this criminal investigation can be put to rest quickly along with the remainder of Jerome Powell’s term. We need to restore confidence in the Fed.”
The overhaul of the Fed’s two main buildings in Washington’s Foggy Bottom neighborhood is expected to cost $2.5 billion and is slated for completion in 2027. The project is paid for by the central bank rather than taxpayers.
The Fed funds its operations independently, relying largely on interest earned from government securities and fees from financial institutions.
Even so, the cost overruns have drawn criticism from President Donald Trump, who has repeatedly seized on the project as evidence of what he has described as mismanagement at the Fed.
For now, it remains unclear what comes next, with the Federal Reserve navigating largely uncharted territory.
