Washington Freaks Out Over Fed Subpoenas

Republicans And Democrats Unite To Defend The Untouchable Fed

We know one thing from the recent fracas over the Department of Justice serving subpoenas to the Federal Reserve: Official Washington is going off the rails on a crazy train.

There is not one part of the DC Swamp that has not been shocked and outraged at the temerity of US Attorney Jeanine Pirro serving the Federal Reserve with grand jury subpoenas last Friday. The news was so triggering inside the Beltway one might have thought Pirro guilty of some unforgivable crime against humanity, such as wearing a Yankees cap at Fenway Park.

Instead, her offense was something far more mundane: conducting an actual investigation. She hasn’t even indicted anyone from the Federal Reserve (yet). All she’s done is issue subpoeanas so her office can ask a few questions of Jay Powell and a few of his colleagues.

Apparently, that was enough to cause multiple serial public meltdowns by just about everyone in official Washington.

Investigate What?

I will state up front that we have no confirmation that a crime has even occurred.

If there might not even have been a crime, then why was Pirro’s office investigating the Federal Reserve? Simply put, they were asked to investigate.

As I mentioned previously, last July Congresswoman Anna Paulina Luna sent a criminal referral to the US Attorney General requesting that Jay Powell be investigated for possible perjury arising out of congressional testimony regarding renovations of the Federal Reserve’s Eccles Building. As detailed in her referral letter, Congresswoman Luna outlined how several of Powell’s statements were false. Congresswoman Luna concludes her letter by pointing out that making false statements in sworn testimony to Congress may amount to perjury.

If Chairman Powell knowingly misrepresented these facts—whether in testimony before Congress or in formal correspondence to senior executive officials—such actions may constitute perjury or materially false statements under federal law.

While perjury is rarely prosecuted, it is still a federal crime¹, punishable by up to five years in prison.

Additionally, there is the not-small matter of the renovation project’s budget ballooning from $1.9 Billion to $2.5 Billion—an increase of roughly 31.5%. According to Russell Vought, Director of the Office of Management and Budget, the project cost per square foot is double normal renovation costs for historic federal buildings.

While the Federal Reserve is self-funded, and does not depend on taxpayer dollars, for a renovation project to overshoot its budget by nearly a third should raise questions. Cost overruns of that magnitude could easily involve theft or fraud by one or more contractors on the project.

Because of such concerns, Congresswoman Luna asked the Department of Justice to investigate, which it did.

That’s where things get strange. According to Jeanine Pirro’s post on X, the US Attorney’s office contacted the Federal Reserve multiple times with questions and was ignored.

Since officials at the Fed refused to cooperate with her office, Pirro opted to issue subpoenas.

That is where this matter stands. We do not know that a crime was committed. We do not even know if Powell committed perjury in his congressional testimony last summer about the building renovations. Powell has not been indicted, nor has anyone working at the Federal Reserve.

Partisan Powell

To date, there has been no reporting of Powell or others at the Federal Reserve seeking to quash the subpoenas. Federal regulations outline how one challenges a subpoena², but we have no indication the Federal Reserve has made such a challenge.

Instead, Jerome Powell released a video statement Sunday evening claiming the subpoenas were an intimidation tactic by the Trump Administration because the FOMC would not bend to President Trump’s will on interest rates.

The video itself is remarkable if only for its timing. If we inspect the webpage properties from the link on the Federal Reserve website, we see that the page was modified on Sunday, January 11, 2026, at 6:30PM Central Time.

That is roughly one hour before the Shanghai stock exchange opens. Powell released the video at just the right time to ensure it had maximum impact on stock markets around the world.

With no motion to quash being reported, it is difficult to believe the timing of the video’s release was coincidental, something which John Carney of Breitbart has also noted.

We must note also that, according to the Federal Reserve’s website, one of the primary functions of the Federal Reserve is that it “promotes the stability of the financial system….” Acting specifically to disrupt financial markets is something the Federal Reserve very explicitly should not be doing—and yet that is exactly what Powell did.

Regardless of any partisan animus or agenda which might have occasioned the Department of Justice investigating the Federal Reserve, Jerome Powell acted in a nakedly partisan fashion. That is not supposed to happen, ever.

The Swamp Erupts In Panic

If Jerome Powell was seeking a partisan response for his video, he got it, and from every direction imaginable.

One of the earliest responses came from Republican Senator Thom Tillis of North Carolina, who made the sweeping accusation that the Trump Administration was pushing to end the Federal Reserve’s “independence.”

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. It is now the independence and credibility of the Department of Justice that are in question.

Huh? The Department of Justice is doing something untoward by acting on a criminal referral from Congress?

Bear in mind that no one has been indicted, and according to Jeanine Pirro indictments were not even mentioned. We don’t know if Pirro intends to indict anyone or not. What we do know is that subpoenas were issued, and Pirro claims they were issued because the Federal Reserve ignored her office’ outreach efforts regarding Congresswoman Luna’s criminal referral letter.

Bear in mind also that the Department of Justice following up on criminal referrals from Congress is part and parcel of how Congressional oversight is supposed to work. Pirro’s office looking into Congresswoman Luna’s perjury accusation against Powell is what is supposed to happen.

The Democrats, of course, were not about to let the Republicans outdo them in rank hypocrisy, as evidenced by Congressman Dan Goldman’s response to MS NOW’s Nicole Wallace questioning on the matter:

I was encouraged by Lisa Murkowski’s comments where she said, if the Department of Justice is investigating the fed, then the Congress needs to investigate the Department of Justice, which is, of course, exactly right. And so there are a couple senators, which can make a difference. But once again, there are crickets from House Republicans. And the notion of using the criminal justice system as a political cudgel, is now being normalized by these Republicans. But the impact and the damage is now escalating tremendously. It’s now not just political enemies like Lisa James or Adam Schiff or James Comey. It is actual government officials, current government officials. Lisa Cook is one now Jerome Powell. And the impact, I think, is really reflected in that statement, from the former board chairs and members, where they emphasize the importance of the rule of law. Now, I’ve spoken to you many times about the rule of law. It is a somewhat vague concept to a lot of people, but when they say that the rule of law is the foundation for the economic success of this country, what they are meaning is that the notion that our laws are followed, are independent and are, neutrally arbitrary by judges is the basis for our economic system. It is the reason why the dollar is so strong. And if you are now going to have monetary policy driven by political considerations, all of that faith in the dollar just goes completely down and it will tank our economy.

Follow the “logic” here (and I am using that term extremely loosely):

• Because the Department of Justice responded to a Congressional criminal referral and began what by all accounts was a routine investigation into Jay Powell’s congressional testimony, the Department of Justice itself must now be investigated?

• Because the Department of Justice responded to a Congressional criminal referral and began what by all accounts was a routine investigation into Jay Powell’s congressional testimony, the Department is being used as a “political cudgel”?

• Because the Department of Justice responded to a Congressional criminal referral and began what appears to be a routine investigation into Jay Powell’s congressional testimony, the dollar is going to go down and the economy is going to tank?

Is the Department of Justice supposed to simply ignore criminal referrals from Congress? How does that further Congress’ oversight role?

Of course, no Swamp melodrama would be complete without the ritual pontifications from a cadre of “experts”, which we get in the form of a hastily assembled statement slamming the Department of Justice for even investigating the Federal Reserve (emphasis mine):

The Federal Reserve’s independence and the public’s perception of that independence are critical for economic performance, including achieving the goals Congress has set for the Federal Reserve of stable prices, maximum employment, and moderate long-term interest rates. The reported criminal inquiry into Federal Reserve Chair Jay Powell is an unprecedented attempt to use prosecutorial attacks to undermine that independence. 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. It has no place in the United States whose greatest strength is the rule of law, which is at the foundation of our economic success.

On what basis is this claim made? Remember, as I have outlined previously, Powell himself has provided no basis for his claim that this investigation is merely a partisan effort to punish him for not agreeing with President Trump on interest rates.

We should pause here to consider a question: Does Powell believe that if the Federal Open Market Committee would cut the federal funds rate by a full percentage point the investigation would go away? Was a quid pro quo like that offered?

Nothing Jerome Powell said in his video suggested that such a bargain was even hinted at.

That matters, because if such a quid pro quo had been offered, or even implied in the most roundabout way, that would be clear corruption on the part of the Department of Justice. That would be something for Congress to investigate.

However, Powell has not made that accusation. Powell has not even hinted at that accusation.

Then there’s Fox Business’ Larry Kudlow’s surreal defense of Powell, where he explicitly acknowledges there is corruption within the Federal Reserve (again, emphasis mine):

A whole bunch of his Fed cronies face accusations of insider trading, or breaches of ethics, or mortgage fraud, but he never did anything about it. He jumped on the socialist bandwagon of climate change, woke, DEI, no loans to fossil fuel companies, everything wrong.

According to Kudlow, insider trading, mortgage fraud, and sundry other “ethical breaches” (on Main Street we call them “crimes”) are rampant inside the Federal Reserve, and Jerome Powell did absolutely nothing about any of it.

Yet Kudlow does not want Powell investigated, because politics:

He probably did testify wrongly about the Fed’s rebuilding plans before Congress, but Mr. Trump will not be able to get his new chairman through the Senate until he withdraws Mr. Powell’s criminal indictment. It’s not going to happen.

Again, we should clarify the language: “testify wrongly” is what is known elsewhere as “perjury”. Kudlow is saying that Powell is guilty of the very thing for which Congresswoman Luna sent a criminal referral to the Department of Justice, but nothing should be done about it because the Senate won’t like it.

We should also note that Kudlow gets an important fact wrong here: there is no criminal indictment. Powell is not under indictment. According to Jeanine Pirro no one in her office is even talking about indictments (yet). There is no indictment to withdraw.

Kudlow does correct himself later on, but still doubles down on “don’t investigate because politics.”

Here’s the thing, much more importantly: Republican banking committee senators like Thom Tillis and others won’t confirm a new Fed chairman until the subpoenas are quashed. So it’s an exercise in futility.

In other words, no one can even ask awkward questions of the Federal Reserve.

If Jerome Powell were found to have accepted bribes to manipulate interest rates, the Department of Justice should not act because that’s an exercise in futility.

If Federal Reserve Governors engage in mortgage fraud (*cough* Lisa Cook *cough*), the Department of Justice should not act because that’s an exercise in futility.

If the Federal Reserve manipulated systems like FedNOW to arbitrarily deny businesses access to financial services, the Department of Justice should not act because to do so would “tank the economy.”

This is the logic the Swamp is offering in response to the Department of Justice issuing subpoenas because Jerome Powell decided to stonewall the US Attorney’s office.

The Rule Of Law

One phrase has crept up time and again in everything the Swamp rats have had to say on this topic: “the rule of law.”

Time and again the Swamp rats have reminded us how important “the rule of law” is to the American systems of politics and governance.

Let me remind the Swamp rats what the US courts define as “the rule of law”:

Rule of law is a principle under which all persons, institutions, and entities are accountable to laws that are:

• Publicly promulgated

• Equally enforced

• Independently adjudicated

• And consistent with international human rights principles.

Where is the equal enforcement when partisan political figures are demanding that no investigation of the Federal Reserve ever be mounted, even for corruption that is common knowledge?

Where is the independent adjudication when a US Attorney cannot issue a subpoena to the Federal Reserve Chairman without the blessing of those same partisan political figures?

Did Jerome Powell perjure himself before Congress? Anna Paulina Luna thinks he may have. Larry Kudlow is convinced Powell perjured himself.

Will the US Attorney’s office indict Powell for perjury? At this point, nobody knows.

What we do know is that the Department of Justice is not acting independently if it has to get the blessing of various and sundry political partisans before starting an investigation.

What we do know is that the Department of Justice is not acting independently if it is required to turn a blind eye to potential Fed corruption because acting on that corruption would “tank the economy.”

What we do know is that the Federal Reserve itself is not acting independently if it expects various and sundry political partisans to shield it from scrutiny.

What we do know is that the Federal Reserve itself is not acting independently if it is held to a different legal standard than the rest of us.

What we also know is that neither Republicans in Congress nor Democrats want either an independent Department of Justice or an independent Federal Reserve.

What we also know is that neither Republicans in Congress nor Democrats want the rule of law.

As both Republicans and Democrats have made abundantly clear with their tortured illogical efforts to defend Jay Powell, they want a Department of Justice that walks on eggshells. They want a Federal Reserve that manipulates interest rates, caters to Wall Street, and floods the economy with free money. They want the ability to redefine the “rule of law” to satisfy whatever political expedient has captured their attention at the moment.

What do you want?

1. 18 USC §1621

2. 5 CFR §1201.82