WSJ What’s News — U.S. Prosecutors Investigate Fed Chair Powell

Date: January 12, 2026
Host: Luke Vargas, The Wall Street Journal

Episode Overview

This episode dives into the Justice Department's investigation of Federal Reserve Chair Jerome Powell—a move threatening a criminal indictment and raising concerns about the central bank's independence. The episode also covers major global and political developments: U.S. reactions to deadly protests in Iran, a large-scale immigration crackdown in Minnesota, and new policy threats from President Trump regarding both Venezuela and U.S. credit card interest rates. The episode is packed with expert analysis and real-time financial market reactions.

Key Discussion Points

1. Justice Department Investigation of Jerome Powell

• Subject: U.S. prosecutors are investigating Fed Chair Jerome Powell, focusing on his testimony regarding cost overruns and spending on the Federal Reserve’s renovation of two historic buildings.

• Political Backdrop: The probe, run by the Washington U.S. attorney's office under Jeanine Pirro (a close Trump ally), follows President Trump’s threat of a lawsuit against Powell over the renovations.

• Powell’s Response: In a video posted on X (formerly Twitter), Powell called the investigation a pretext for attacking central bank independence.

  “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.”
  — Jerome Powell, [01:38]

• Discussion: Powell insists criminal prosecution will not keep him from serving his term (ending May 15). The conversation turns to the broader implications for the Fed’s autonomy.

  “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.”
  — Powell, [01:51]

2. Market Reaction and Expert Analysis

• Finance Editor’s Take: Alex Frangos, Journal finance editor, comments on Powell’s unusually forceful statement and market moves.

  “He’s a very technocratic, careful guy… for him to come out and do a video, put it out at 7:30, just as NFL games are ending, knowing who the audience is, it’s a pretty strong statement.”
  — Alex Frangos, [02:19]

• Immediate Market Movements:

  • The dollar weakens
  • Gold hits a record high (up another 2%)
  • Long-term bond yields rise, showing investor nervousness
  • U.S. stock futures drop

  “Generally it’s a negative reaction. This definitely makes people worried, not just about the short term... The big implication is for his successor.”
  — Frangos, [02:50–03:28]

• Concerns about Fed Independence:
  Frangos flags potential chilling effects for the next Fed chair, with top candidates now seeing the risk of political interference.

  “They now have to go in thinking, well, I want to be independent, but look what happened to the guy before me.”
  — Luke Vargas & Frangos, [03:32–03:34]

• Upcoming Fed Meetings Context:
  Despite the uproar, no immediate impact is expected on FOMC meetings. However, the Supreme Court case on Fed governor Lisa Cook (whom Trump has also tried to oust) could set a precedent for presidential power over the central bank.

3. U.S. Policy and Unrest in Iran

• Developments: Over 500 killed and 10,000 arrested during two weeks of anti-government protests in Iran; Trump may consider intervention.

• Military Options: Trump tells reporters:

  “We’re looking at it very seriously, the military is looking at it, and we’re looking at some very strong options. We’ll make a determination.”
  — President Trump, [00:34]

• Analysis by Alex Ward (National Security Reporter):
  U.S. intervention could range from sanctions to cyberattacks to military strikes, but any overt action risks strengthening Iranian government propaganda and demoralizing protesters.

  “If the US were to attack Iran, it would actually undermine the protests...It would help the Iranian propaganda that the US is actually behind these protests.”
  — Alex Ward, [06:02]

  “The sort of main strategic question Trump has to ask is, if the US were to bomb Iran, does that lead to a better future for Iran?”
  — Ward, [06:36]

4. Immigration Crackdown and Police Shooting in Minnesota

• Operation: DHS conducts its largest ever immigration enforcement sweep in the Twin Cities, with 2,000+ agents deployed.
• Controversy: An ICE agent shot and killed Renee Nicole Good in Minneapolis last week.
• Official Stances:
  • Secretary Kristi Noem (DHS): Calls Good a "domestic terrorist" for “obstructing agents”

    “Overwhelmingly, the people in this country said they wanted America to be safe again…”
    — Kristi Noem, [08:35]

  • Minneapolis Mayor Jacob Fry: Demands transparency and state involvement in the investigation.

    “What I was pushing back on...was a narrative that had jumped to that conclusion right from the get-go...when you’ve got a federal administration that is so quick to jump on a narrative as opposed to the truth, I think we all need to be speaking out.”
    — Jacob Fry, [09:30]

5. U.S. Oil Policy on Venezuela

• Trump Threatens ExxonMobil:
  The president suggests ExxonMobil could be blocked from drilling in Venezuela after a dismissive response from its CEO.

  “Probably be inclined to keep Exxon out. I didn’t like their response. They’re playing too cute.”
  — President Trump, [10:18]

• White House Meeting Recap: Exxon CEO Darren Woods calls Venezuela “uninvestable” but open to future partnership if legal frameworks improve. Trump promotes U.S. investment, offering security guarantees to American firms.

6. Congressional Stock Trading Ban Proposal

• Legislation Details:
  House Republicans prepare to introduce a bill banning lawmakers from individual stock trading, allowing only diversified funds, and requiring pre-sale public notifications. Penalties would increase for violations.

7. Trump Calls for Cap on Credit Card Rates

• Announcement:
  President Trump proposes a federal 10% cap on credit card interest—down from the 23% average.
• Analysis:
  • Could help lower-income borrowers, but banks may restrict lending to riskier consumers.
  • American Bankers Association warns it may "hurt families and small business owners by driving them toward less regulated alternatives."

Notable Quotes & Memorable Moments

• Jerome Powell:
  “This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions, or...by political pressure or intimidation.” – [01:51]

• Alex Frangos:
  “He’s a very technocratic, careful guy … for him to come out and do a video...it’s a pretty strong statement.” – [02:19]

• President Trump on Venezuela:
  “Probably be inclined to keep Exxon out. I didn’t like their response. They’re playing too cute.” – [10:18]

• Alex Ward on Iran:
  “If the US were to attack Iran, it would actually undermine the protests...It would help the Iranian propaganda...” – [06:02]

• Jacob Fry on Minneapolis Shooting:
  “When you’ve got a federal administration that is so quick to jump on a narrative as opposed to the truth, I think we all need to be speaking out.” – [09:30]

Segment Timestamps

| Topic | Start Time | |---------------------------------------------------------|---------------| | Investigation of Jerome Powell & Fed Independence | 00:21 | | Powell’s Public Response & Market Reaction | 01:38 | | Expert Analysis by Alex Frangos | 02:19 | | Implications for Fed Policy & Leadership | 03:32 | | Iran: Protests, U.S. Options, President Trump’s Response| 05:08 | | Market Dynamics from Iran & Fed News | 02:50–04:38 | | Immigration Crackdown in Minnesota & ICE Shooting | 07:51 | | Official Statements—Noem and Fry | 08:31, 09:30 | | U.S. Policy & Oil Companies in Venezuela | 10:18 | | Congressional Stock Trading Ban & Credit Card Rate Cap | 09:49–End |

Tone and Style

The language throughout is fact-driven, with flashes of urgency and clarity characteristic of breaking financial and political news. Powell’s statements are unusually forceful for a Fed official, and there is a sense of heightened tension both for markets and for U.S. institutions. The episode combines straightforward reporting with rapid expert analysis and incorporates relevant quotes for context.