Washington
\n \u00a0\u2014\u00a0<\/p>\n
\n Federal prosecutors have opened a criminal investigation into the Federal Reserve\u2019s $2.5 billion renovation<\/a> of its headquarters in Washington, DC.\n <\/p>\n \n In an extraordinary video posted by Powell on Sunday night, he called the investigation \u201cpretext\u201d resulting from his ongoing struggle with the administration over interest rates, saying it was a consequence of broader \u201cthreats and ongoing pressure\u201d by the administration.\n <\/p>\n \n The probe sends a potentially chilling message to Powell \u2013 and to whomever might next lead the Fed. President Donald Trump\u2019s attacks on the Fed chair have hammered on the Fed\u2019s traditional political independence, suggesting whomever he selects to replace Powell when his term ends in May will face continuing pressure. Trump has even said he should have a say in rate decisions.\n <\/p>\n \n But investors and economists prize the Fed\u2019s independence as a sign policymakers will think of the long-term ramifications, and not short-term political whims, when steering the economy.\n <\/p>\n \n On Sunday, Powell directly linked the probe to the question of the Fed\u2019s independence and ability to set interest rates without political interference.\n <\/p>\n \n \u201cThe 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,\u201d Powell said in a statement late Sunday.\n <\/p>\n \n \u201cThis is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions\u2014or whether instead monetary policy will be directed by political pressure or intimidation.\u201d\n <\/p>\n \n Justice Department spokesperson Chad Gilmartin declined to comment on the investigation but said in a statement to CNN that the attorney general wants to \u201cprioritize investigating any abuse of tax payer dollars.\u201d\n <\/p>\n \n The White House referred CNN to the DOJ statement.\n <\/p>\n \n Trump and his allies have repeatedly slammed Powell over the past year for not cutting interest rates to the president\u2019s liking. The Fed in the second half of last year lowered rates three times in row<\/a>, though officials have recently said they\u2019re unlikely to lower rates again for a while.\n <\/p>\n \n Trump\u2019s pressure campaign has included a barrage of personal insults<\/a> at Powell, evolving into threats to fire the Fed chair<\/a>. However, Powell has maintained that Trump does not have the authority to fire him.\n <\/p>\n \n Later in the year Trump targeted Fed Governor Lisa Cook, appointed by then-President Joe Biden. The president and his allies accused Cook of mortgage fraud. Trump cited the allegations when he fired her in August, although Cook has not been charged criminally. The Supreme Court will hear oral arguments<\/a> later this month on whether Trump can terminate Cook.\n <\/p>\n \n The Fed\u2019s renovation has also been a source of ongoing controvery. Powell testified before Congress in June<\/a>, saying the renovation was a collaboration with various agencies and that costs had changed over time.\n <\/p>\n \n Trump allies such as Federal Housing Finance Agency Director Bill Pulte and Office of Management and Budget Director Russ Vought have claimed the project was mismanaged. But the Fed says the upgrades to its decades-old buildings were necessary, including removing asbestos and upgrading electrical and ventilation systems.\n <\/p>\n