tl;dr
Federal Reserve Chair Jerome Powell faces a criminal referral by Representative Anna Paulina Luna for allegedly providing false testimony about a $600 million increase in Eccles Building renovation costs. Luna accuses Powell of downplaying expenses before the Senate Banking Committee, despite intern...
Federal Reserve Chair Jerome Powell faces a criminal referral initiated by U.S. Representative Anna Paulina Luna over allegations of false testimony regarding a $600 million increase in the renovation costs of the Eccles Building. Luna accuses Powell of lying under oath before the Senate Banking Committee, claiming he downplayed these expenses as minor despite internal documents suggesting otherwise.
This referral raises legal and political tensions, especially amid President Donald Trump’s repeated calls for significant interest rate cuts. Markets have responded by increasing expectations for a rate reduction, with a 56.1% probability priced in for the Federal Reserve’s September meeting. While Trump has publicly dismissed firing Powell, he hinted that mounting legal and reputational pressure could lead to Powell’s resignation.
Should Powell be found guilty of perjury, he could face up to five years in prison and financial penalties. The Department of Justice has yet to respond to the referral, and no official charges have been announced. The referral amplifies Trump's criticism of Powell’s cautious monetary policy approach, which he argues hurts economic opportunities, especially for younger Americans seeking affordable housing.
Additional controversy surrounds reports that Treasury Secretary Scott Bessent advised Trump against dismissing Powell, warning such a move might trigger lawsuits and destabilize financial markets. Trump, however, refuted these claims, affirming his judgment on matters affecting the market and the country. Powell has served as Fed Chair since 2018, after being nominated by Trump as Janet Yellen’s successor.