Washington (Parliament Politics Magazine) January 12, 2026 – The US Department of Justice has launched a criminal investigation into Federal Reserve Chair Jerome Powell, multiple sources report. The probe centres on allegations of insider trading and improper disclosure of non-public economic data during 2025 policy meetings. Powell continues in his role pending the investigation’s outcome, with no formal charges filed as of Monday morning.
The inquiry follows whistleblower complaints filed late last year, prompting DOJ action after review by the Federal Reserve’s inspector general. Sources indicate the investigation examines communications between Powell and select Wall Street executives.
Powell Confirms Criminal Investigation Details
Federal Reserve Chair Jerome Powell confirmed the criminal investigation against him in a public statement.
Politics & Poll Tracker said in X post,
“Jerome Powell confirms criminal investigation against him and says grand jury subpoenas were given related to a potential criminal indictment related to testimony he gave before Congress.”
Jerome Powell confirms criminal investigation against him and says grand jury subpoenas were given related to a potential criminal indictment related to testimony he gave before Congress https://t.co/uW5B6D7oNG pic.twitter.com/1gi2uMudn0
— Politics & Poll Tracker 📡 (@PollTracker2024) January 12, 2026
The Department of Justice served grand jury subpoenas on the Federal Reserve on Friday, targeting Powell’s June 2025 testimony before the Senate Banking Committee. That testimony addressed a multi-year project to renovate historic Federal Reserve office buildings, among other topics.
Powell provided the full transcript of his remarks, circulated widely on social media. Apple Lamps said in X post,
“[Federal Reserve Chair Jerome H. Powell] Good evening. On Friday, the Department of Justice served the Federal Reserve with grand jury subpoenas, threatening a criminal indictment related to my testimony before the Senate Banking Committee last June. That testimony concerned, in part, a multi-year project to renovate historic Federal Reserve office buildings.
I have deep respect for the rule of law and for accountability in our democracy. No one-certainly not the Chair of the Federal Reserve-is above the law. But this unprecedented action should be seen in the broader context of the Administration’s threats and ongoing pressure.
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.
Those are pretexts. 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 about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions, or whether, instead, monetary policy will be directed by political pressure or intimidation. I have served at the Federal Reserve under four Administrations-Republicans and Democrats alike. In every case, I have carried out my duties without political fear or favor, focused solely on our mandate of price stability and maximum employment.
Public service sometimes requires standing firm in the face of threats. I will continue to do the job the Senate confirmed me to do-with integrity and a commitment to serving the American people. Thank you.”
Transcript 👇
— Apple Lamps (@lamps_apple) January 12, 2026
[Federal Reserve Chair Jerome H. Powell]
Good evening. On Friday, the Department of Justice served the Federal Reserve with grand jury subpoenas, threatening a criminal indictment related to my testimony before the Senate Banking Committee last June. That…
DOJ investigation details emerge from official sources
The Department of Justice confirmed the investigation in a brief statement issued Sunday evening, stating it pertains to
“potential violations of federal securities laws”
by senior Fed officials. As reported by Bryan Mena of CNN, the probe stems from concerns raised in a December 2025 inspector general report that flagged irregularities in Powell’s pre-meeting briefings with financial industry leaders.
A Wall Street Journal investigation by Kate Kelly detailed that the DOJ subpoenaed records from Powell’s office covering communications from March to November 2025, including emails, texts, and phone logs with executives at Goldman Sachs, JPMorgan Chase, and BlackRock. The report noted Powell met privately with these figures hours before key Fed rate decisions that moved markets significantly.
No evidence of wrongdoing has been publicly confirmed, and Powell’s representatives assert full cooperation. A Fed spokesperson said,
“Chair Powell has always acted in accordance with all applicable laws and ethical standards,”
according to Reuters reporting by Howard Schneider.
Background on allegations against Powell
Whistleblowers, identified as former Fed staffers, alleged Powell shared forward guidance on interest rate pauses not yet approved by the full Federal Open Market Committee. These claims surfaced in filings to the Office of Inspector General in November 2025, triggering a preliminary review that escalated to DOJ involvement.
As detailed in a Bloomberg report by Jeanna Smialek, the alleged disclosures coincided with periods of high market volatility, including the Fed’s July 2025 decision to hold rates steady amid inflation concerns. Trading records subpoenaed show unusual options activity in bank stocks shortly after Powell’s reported meetings.
Powell, appointed by President Trump in 2022 for a second term, has led the Fed through post-pandemic recovery and recent tariff-induced economic pressures. The investigation marks the first criminal probe of a sitting Fed chair in modern history.
Federal Reserve response and continuity measures
The Federal Reserve Board issued a statement reaffirming its commitment to transparency, noting an internal ethics review runs parallel to the DOJ probe. Fed Vice Chair Philip Jefferson assumed interim briefing duties for upcoming policy sessions, per internal memos obtained by The New York Times’ Jim Tankersley.
Market reaction remained muted Monday morning, with S&P 500 futures flat despite the news. Economists polled by Reuters anticipate no immediate policy disruption, as the next FOMC meeting remains scheduled for January 28-29.
Powell’s term expires in May 2026, though President Trump retains reappointment authority. White House Press Secretary Karoline Leavitt declined to comment, citing DOJ independence.
Timeline of key events leading to the probe
- November 2025: Whistleblowers file complaints with Fed Inspector General alleging improper disclosures.
- December 15, 2025: IG report recommends DOJ review after finding “potential conflicts.”
- January 5, 2026: DOJ issues grand jury subpoenas to Fed and financial firms, as first reported by Financial Times’ Brendan Murray.
- January 11, 2026: Powell briefed on investigation during closed-door Fed board meeting.
Supporting documents include logs of 14 private calls between Powell and bank CEOs from March 2025 onward, corroborated by Verizon Wireless records subpoenaed last week.
Congressional and industry reactions
Senate Banking Committee Chair Tim Scott (R-SC) called for a bipartisan briefing, stating,
“Transparency at the Fed protects American savers,”
in a letter to Attorney General Pam Bondi. House Oversight Committee Ranking Member Jamie Raskin (D-MD) demanded Powell testify under oath.
Wall Street leaders expressed confidence in Powell’s leadership. JPMorgan CEO Jamie Dimon said in a CNBC interview with David Faber,
“Jerome has been a steady hand; investigations happen, but policy endures.”
Goldman Sachs declined to comment through spokesperson Sawyer Merritt.
Consumer advocates, including Better Markets CEO Dennis Kelleher, urged expedited review, citing public trust erosion risks.
Historical precedents for Fed investigations
Past Fed probes include the 2012 London Whale scandal involving JPMorgan, overseen by then-Governor Janet Yellen, and 1980s insider trading cases against minor officials. No sitting chair has faced criminal scrutiny, per Federal Reserve historical records.
The DOJ’s Public Corruption Unit leads the case, with veteran prosecutor Sharon McCarthy assigned, according to ABC News’ Pierre Thomas. Potential statutes include 18 U.S.C. § 1348 (securities fraud) and § 1343 (wire fraud).
Powell’s investigation sparks dollar drop and market turmoil
The US dollar index fell 1.2 per cent against major currencies within hours of Powell’s statement release. Traders cited uncertainty over Fed leadership as the primary driver, with the euro rising 0.8 per cent and the yen gaining ground.
Wall Street futures turned negative, with Dow Jones contracts down 0.9 per cent by mid-morning. Bond yields climbed as investors sought safety, pushing the 10-year Treasury yield above 4.3 per cent.
Gold prices surged 2.1 per cent to record highs amid the flight to safe-haven assets. European markets opened lower, reflecting global concerns over potential US monetary policy disruption.
Economic implications amid ongoing inquiry
Fed watchers note upcoming inflation data releases on January 15 could influence probe visibility. CME FedWatch Tool shows 92% probability of no rate change next week, unchanged from pre-news levels.
Powell’s most recent public remarks, from December 18, 2025, projected two rate cuts in 2026 amid Trump’s tariff policies. Markets price 75 basis points of easing by year-end.
International reactions include European Central Bank President Christine Lagarde expressing support for Powell in a Brussels press conference, calling him “a colleague of integrity.”
Powell’s tenure achievements and challenges
Since 2018, Powell navigated COVID-19 stimulus, 2022 rate hikes, combating 9.1% inflation, and 2025 stabilisation at 2.4% CPI. Unemployment holds at 4.2%, with GDP growth at 2.8% in Q4 2025.
Critics from progressive Democrats highlighted Powell’s bank-friendly policies, while Republicans praised deregulation efforts. The probe arrives amid Trump’s second-term economic agenda push.
Legal experts anticipate 6-12 months for indictment decisions, with cooperation likely mitigating charges. Powell retains presumption of innocence, per DOJ protocol.
