Federal Reserve Chairman Jerome Powell, right, and President Donald Trump look over a document of cost figures during a visit to the Federal Reserve, July 24, 2025, in Washington. (AP Photo/Julia Demaree Nikhinson, File)2026-01-12T15:59:59Z WASHINGTON (AP) The Trump administrations criminal investigation of Federal Reserve Chair Jerome Powell appeared on Monday to be emboldening defenders of the U.S. central bank, who pushed back against President Donald Trumps efforts to exert more control over the Fed.The backlash reflected the overarching stakes in determining the balance of power within the federal government and the path of the U.S. economy at a time of uncertainty about inflation and a slowing job market. This has created a sense among some Republican lawmakers and leading economists that the Trump administration had overstepped the Feds independence by sending subpoenas.The criminal investigation a first for a sitting Fed chair sparked an unusually robust response from Powell and a full-throated defense from three former Fed chairs, a group of top economic officials and even Republican senators tasked with voting on Trumps eventual pick to replace Powell as Fed chair when his term expires in May. White House press secretary Karoline Leavitt told reporters that Trump did not direct his Justice Department to investigate Powell, who has proven to be a foil for Trump by insisting on setting the Feds benchmark interest rates based on the data instead of the presidents wishes.One thing for sure, the presidents made it quite clear, is Jerome Powell is bad at his job, Leavitt said. As for whether or not Jerome Powell is a criminal, thats an answer the Department of Justice is going to have to find out. Critics see Trump as trying to control the FedThe investigation demonstrates the lengths the Trump administration is willing to go to try to assert control over the Fed, an independent agency that the president believes should follow his claims that inflationary pressures have faded enough for drastic rate cuts to occur. Trump has repeatedly used investigations which might or might not lead to an actual indictment to attack his political rivals.The risks go far beyond Washington infighting to whether people can find work or afford their groceries. If the Fed errs in setting rates, inflation could surge or job losses could mount. Trump maintains that an economic boom is occurring and rates should be cut to pump more money into the economy, while Powell has taken a more cautious approach in the wake of Trumps tariffs.Several Republican senators have condemned the Department of Justices subpoenas of the Fed, which Powell revealed Sunday and characterized as pretexts to pressure him to sharply cut interest rates. Powell also said the Justice Department has threatened criminal indictments over his June testimony to Congress about the cost and design elements of a $2.5 billion building renovation that includes the Feds headquarters.After speaking with Chair Powell this morning, its clear the administrations investigation is nothing more than an attempt at coercion, said Sen. Lisa Murkowski, R-Alaska, on Monday.Jeanine Pirro, U.S. attorney for the District of Columbia, said on social media that the Fed ignored her offices outreach to discuss the renovation cost overruns, necessitating the use of legal process which is not a threat. The word indictment has come out of Mr. Powells mouth, no one elses, Pirro posted on X, although the subpoenas and the White Houses own statement about determining Powells criminality would suggest the risk of an indictment.A bipartisan group of former Fed chairs and top economists on Monday called the Trump administrations investigation an unprecedented attempt to use prosecutorial attacks to undermine the Feds independence, stressing that central banks controlled by political leaders tend to produce higher inflation and lower growth. I think this is ham-handed, counter-productive, and going to set back the presidents cause, said Jason Furman, an economist at Harvard and former top adviser to President Barack Obama. The investigation could also unify the Feds interest-rate setting committee in support of Powell, and means the next Fed chair will be under more pressure to prove their independence. The subpoenas apply to Powells statements before a congressional committee about the renovation of Fed buildings, including its marble-clad headquarters in Washington. They come at an unusual moment when Trump was teasing the likelihood of announcing his nominee this month to succeed Powell as the Fed chair and could possibly be self-defeating for the nomination process. FILE - Federal Reserve Chairman Jerome Powell speaks at a news conference after the Federal Open Market Committee meeting Oct. 29, 2025, at the Federal Reserve Board Building in Washington. (AP Photo/Manuel Balce Ceneta) FILE - Federal Reserve Chairman Jerome Powell speaks at a news conference after the Federal Open Market Committee meeting Oct. 29, 2025, at the Federal Reserve Board Building in Washington. (AP Photo/Manuel Balce Ceneta) Add AP News on Google Add AP News as your preferred source to see more of our stories on Google. Share Share Facebook Copy Link copied Print Email X LinkedIn Bluesky Flipboard Pinterest Reddit Read More While Powells term as chair ends in four months, he has a separate term as a Fed governor until January 2028, meaning that he could remain on the board. If Powell stays on the board, Trump could be blocked from appointing an outside candidate of his choice to be the chair.Some Senate Republicans express doubtsPowell quickly found a growing number of defenders among Republicans in the Senate, who will have the choice of whether to confirm Trumps planned pick for Fed chair.Sen. Thom Tillis, a North Carolina Republican and member of the Senate Banking panel, said late Sunday that he would oppose any of the Trump administrations Fed nominees until the investigation is resolved. If there were any remaining doubt whether advisers within the Trump Administration are actively pushing to end the independence of the Federal Reserve, there should now be none, Tillis said.Sen. Dave McCormick, R-Pa., said the Fed may have wasted public dollars with its renovation, but he said, I do not think Chairman Powell is guilty of criminal activity.Senate Majority Leader John Thune offered a brief but stern response Monday about the tariffs as he arrived at the U.S. Capitol, suggesting that the administration needed serious evidence of wrongdoing to take such a significant step.I havent seen the case or whatever the allegations or charges are, but I would say they better, they better be real and they better be serious, said Thune, a Republican representing South Dakota.Powell could stay on the Fed board, possibly thwarting TrumpIf Powell stays on the board after his term as chair ends, the Trump administration would be deprived of the chance to fill another seat that would give the administration a majority on the seven-member board. That majority could then enact significant reforms at the Fed and even block the appointment of presidents at the Feds 12 regional banks. They could do a lot of reorganizing and reforms without having to pass new legislation, said Mark Spindel, chief investment officer at Potomac River Capital and author of a book on Fed independence. That seat is very valuable. President Donald Trump speaks to reporters while in flight on Air Force One to Joint Base Andrews, Md., Sunday, Jan. 11, 2026. (AP Photo/Julia Demaree Nikhinson) President Donald Trump speaks to reporters while in flight on Air Force One to Joint Base Andrews, Md., Sunday, Jan. 11, 2026. (AP Photo/Julia Demaree Nikhinson) Add AP News on Google Add AP News as your preferred source to see more of our stories on Google. Share Share Facebook Copy Link copied Print Email X LinkedIn Bluesky Flipboard Pinterest Reddit Read More Powell has declined at several press conferences to answer questions about his plans to stay or leave the board.Scott Alvarez, former general counsel at the Fed, says the investigation is intended to intimidate Powell from staying on the board. The probe is occurring now to say to Chair Powell, Well use every mechanism that the administration has to make your life miserable unless you leave the Board in May, Alvarez said. Asked on Monday by reporters if Powell planned to remain a Fed governor, Kevin Hassett, director of the White House National Economic Council and a leading candidate to become Fed chair, said he was unaware of Powells plans. FILE - Federal Reserve Chair Jerome Powell listens during a news conference at the Federal Reserve, Dec. 10, 2025, in Washington. (AP Photo/Jacquelyn Martin) FILE - Federal Reserve Chair Jerome Powell listens during a news conference at the Federal Reserve, Dec. 10, 2025, in Washington. (AP Photo/Jacquelyn Martin) Add AP News on Google Add AP News as your preferred source to see more of our stories on Google. Share Share Facebook Copy Link copied Print Email X LinkedIn Bluesky Flipboard Pinterest Reddit Read More Ive not talked to Jay about that, Hassett said.A weaker Fed could mean a weaker economyA bipartisan group of former Fed chairs and top economists said in their Monday letter that the administrations legal actions and the possible loss of Fed independence could hurt the broader economy.This is how monetary policy is made in emerging markets with weak institutions, with highly negative consequences for inflation and the functioning of their economies more broadly, the statement said. The statement was signed by former Fed chairs Ben Bernanke, Janet Yellen, and Alan Greenspan, as well as former Treasury Secretaries Henry Paulson and Robert Rubin.Still, Trumps pressure campaign had been building for some time, with him relentlessly criticizing and belittling Powell.He even appeared to preview the shocking news of the subpoenas at a Dec. 29 news conference by saying he would bring a lawsuit against Powell over the renovation costs.Hes just a very incompetent man, Trump said. But were going to probably bring a lawsuit against him.__AP writers Lisa Mascaro and Joey Cappelletti contributed to this report. CHRISTOPHER RUGABER Rugaber has covered the Federal Reserve and the U.S. economy for the AP for 16 years. He is a two-time finalist for the Gerald Loeb award for business reporting. twitter mailto JOSH BOAK Boak covers the White House and economic policy for The Associated Press. He joined the AP in 2013. twitter mailto RSShttps://feedx.net https://feedx.site