The institutional war between the White House and the Federal Reserve has exploded into a constitutional crisis. In a stunning video statement released Sunday, Fed Chair Jerome Powell revealed that he has been served with grand jury subpoenas by the Department of Justice (DOJ), signaling the start of a criminal investigation into his conduct.

The probe ostensibly centers on testimony Powell gave to Congress last June regarding the renovation of the Federal Reserve’s headquarters. The Trump administration has accused Powell of "gross mismanagement" and lying about cost overruns on the project. However, Powell—and virtually every legal scholar—sees this as a pretext.

Interest Rates or Jail?

"This is not about renovations," Powell said, looking directly into the camera. "The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on economic data, rather than the preferences of the President."

• The Trump Pressure: President Trump has spent months publicly demanding deeper rate cuts to juice the economy before the midterms. Powell has resisted, citing stubborn inflation. By weaponizing the DOJ, the administration is breaking the century-old norm of central bank independence.
• The Charges: The DOJ is investigating whether Powell committed perjury during his Senate testimony. If indicted, it would be the first time a sitting Fed Chair has faced criminal prosecution.
• Market Reaction: Global markets are expected to open in turmoil. The independence of the Fed is the bedrock of the US dollar’s status as the world reserve currency. If investors believe US monetary policy is now dictated by the threat of arrest, the credibility of American assets could collapse.

"I Will Not Resign"

Powell remained defiant, stating he would continue to serve until his term ends in May. But with the DOJ circling and Trump’s allies calling for his head, the Federal Reserve is under siege. It is a showdown that will define the future of the US economy.