U.S. Prosecutors Investigate Fed Chair Powell

Summary

---

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.

---

Transcript

[A]

Hey, it's Ryan Knudsen, host of the Journal Podcast, our show about money, business and power. If you're looking for more deeply reported stories like we share every day, consider becoming a subscriber to the Wall Street Journal. Visit subscribe.WSJ.com TheJournal all lowercase to subscribe now.

[B]

The Justice Department threatens Fed Chair Jerome Powell with a criminal indictment and what he calls an attack on the central bank's independence. Plus, President Trump mulls intervent tension in Iran as protest deaths rise.

[C]

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.

[B]

And the latest from Minnesota as more federal agents head to the state. It's Monday, January 12th. I'm Luke Vargas for the Wall Street Journal, and here is the AM edition of what's news, the top headlines and business stories moving your world today. US Prosecutors have launched an investigation into Fed Chair Jerome Powell, threatening a criminal indictment over his testimony last year concerning the bank's building renovation project. We report the investigation is being run out of Washington's U.S. attorney's office, overseen by close ally of the president Jeanine Pirro, and concerns the Fed's spending records. Trump last month threatened a lawsuit against Powell alleging incompetence over the renovation of two historic buildings that's been hit by cost overruns. In a video posted by the Federal Reserve, Powell denied any wrongdoing and called the renovation project pretext for an attack on the central bank's independence.

[A]

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. 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 at by political pressure or intimidation.

[B]

Powell said potential criminal prosecution wouldn't affect his ability to serve out his term as Fed chair, which ends May 15. But that doesn't mean investors will be ignoring these developments as Journal finance editor Alex Frangos is here to discuss. Alex, you've seen Powell's comments. Many have. What was your reaction?

[D]

It was definitely stronger than he usually is. He's a very technocratic, careful guy, you know, tends not to try to make waves in what he says. I mean, Fed chair is like the consummate kind of person who goes before Congress and says nothing for four hours. So for him to come out and do a video, put it on X, put it out at 7:30, just as the NFL games are ending. Knowing you know who the audience is, it's a pretty strong statement, Alex.

[B]

We've still got a few hours until markets open, but I'm assuming we're seeing a reaction. What are you hearing?

[D]

Yeah, so far, negatively. It's not massive so far, but the dollar is definitely weaker. Gold is at a record, went up another 2%. You're seeing long term bond yields rise, which is an indication that investors are nervous about the far future. And stock futures are down. So generally it's a negative reaction. This definitely makes people worried, not just about the short term. Powell's terms up in May, I mean, what's the difference, right? But he would continue to serve on the board as a board member for another two years. So there's the possibility that gets undone. The big implication is for his successor, whether it's one of the Kevins, Kevin Hassert or Kevin Warsh, who are the top candidates to replace him. They now have to go in thinking, well, I want to be independent, but.

[B]

Look what happened to the guy before me.

[E]

Exactly.

[B]

You're turning our attention to the distant future, which is helpful, but we do have a Fed meeting later this month and two more assuming Powell serves out his term till May 15th. I mean, how does this change the context heading into those meetings?

[D]

Well, he's not fighting. They didn't say he's fired and he's not indicted. This was questions from a grand jury. Powell came out fighting, put up the statement saying he's not going anywhere. So there's no indication that this is gonna make a change for the meetings upcoming. But over all of this is that there's the Lisa Cook case, who's the other Fed member who Trump is trying to fire, whose case is going before the Supreme Court. And that's gonna set a very big precedent about how much the president can in fact exert this power to remove a Fed chair or a Fed board member.

[B]

And you mentioned earlier the negative market reaction we've seen heading into trading today. That's relevant because President Trump had wavered in the past about whether to dismiss Powell before he did this in his first term and then again last spring. And then he backed off, we report, because of suggestions from his advisors it would have a negative market impact. Yeah.

[D]

And I mean, so far it's very early and we'll see how the day plays out. Sometimes it takes a little while for markets to digest something like this, but, yeah, so far it's negative. Trump has set this pattern over the last year and in his second term of coming out strong about something and then backing off when markets get upset. You know, we saw that obviously with tariffs and also with some of the Fed moves. There's also gonna be a lot of probably behind the scenes establishment Republicans who are gonna say, come on, like, the guy's leaving in May anyway. Like, why are we doing this?

[B]

That was Journal finance editor Alex Frangos. We go to Iran now, where over 500 people have been killed in two weeks of unrest. According to the Hen Bengal Human Rights Organization, some protesters were killed by government forces with live ammunition. And the group Human Rights Activists in Iran say a further 10,000 people have been arrested. The regime's crackdown on protesters has also gotten the attention of President Trump, who we understand is meeting with advisors tomorrow to consider possible responses. Yesterday, Iran's leadership accused rioters of acting on behalf of the US And Israel and threatened to attack American military bases in the Middle east if the US Hits first. Journal National Security reporter Alex Ward says US Intervention in Iran could include everything from sanctions to cyberweapons to a military strike or nothing at all.

[F]

There is concern that if the US Were to attack Iran, it would actually undermine the protests for a couple of reasons. One, it would help the Iranian propaganda that the US Is actually behind these protests and that they aren't organic and Israel potentially, too. And then there's the other side of this, which is if the US does attack but it doesn't actually have any meaningful effect, then will the protesters be demoralized?

[B]

Alex says that even though Trump has been emboldened by recent military successes, including the removal of Venezuelan President Nicolas Maduro, it isn't enough to suggest an imminent strike on Iran.

[F]

Trump feels that the US Military is just on a hot streak effectively, and he's feeling pretty good. And so in his mind, new military options have a high rate of success. But there's tons of research out there and tons of real world experience. It shows just because you airstrike something doesn't mean you solve the problem. And so 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?

[B]

Coming up, DHS sends hundreds of additional officers to Minnesota. And President Trump weighs in on which oil companies could get a chance to do business in Venezuela and who might be left on the outside looking in those stories and more after the break.

[G]

So you're about to make a trade based on a friend's text, but which you do you listen to, is it we could buy a house in Tulum. Get optioning those options, we could lose everything. Or let's do a little research. Get your head in the trade and make the investment decision that's right for you. Learn [e-mail] TradeSmart.

[B]

In Minnesota, a federal immigration crackdown is continuing this morning in the Twin Cities as part of what the Department of Homeland Security has described as its largest ever immigration enforcement operation. More than 2,000 federal border and immigration agents are taking part. While officers and police continue to clash with protesters, the Trump administration is facing questions about why officials were so quick to defend the actions of an ICE agent who shot and killed Renee Nicole Good in Minneapolis last week before an investigation plays out. Speaking to CNN's Jake Tapper yesterday, Homeland Security Secretary Kristi Noem called Good a domestic terrorist for obstructing agents.

[A]

The question is, what was she doing when she was moving her car?

[H]

The question is, that's the question is we is why are we arguing with a president who's working to keep people safe? Why are we arguing with law enforcement operations that have gone on in this country for years? And we're working to collect murderers and rapists and drug traffickers and fraudsters off the streets of Minnesota, and we don't have local law enforcement and local elected officials that are partnering with us to help do that work. Overwhelmingly, the people in this country said they wanted America to be safe again, that they didn't want dangerous criminals on our streets. I would encourage the elected leaders in that city and in that state to work with us so that we can do our operations without the kind of opposition and people that are conducting and perpetuating the kind of violent rhetoric that we're seeing today.

[B]

On NBC's Meet the Press, Minneapolis Mayor Jacob Fry once again called for state authorities to be involved in the investigation into Good's death, which is currently being overseen by the FBI.

[E]

We need to be doing this right now. We need to be doing this transparently. And what I was pushing back on from the very beginning was a narrative that had jumped to that conclusion right from the get go. And 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.

[B]

A Homeland Security spokesperson said that more than 2,000 immigration arrests have been made in Minnesota since the enforcement operation began at the beginning of December. Foreign. Has said he might block ExxonMobil from drilling in Venezuela. That's after the president met with oil executives at the White House on Friday where Exxon Chief Executive Darren woods said that Venezuela is currently, quote, uninvestable.

[C]

Probably be inclined to keep Exxon out. I didn't like their response. They're playing too cute.

[B]

That was Trump there. Speaking to reporters on Air Force One last night, Wood said significant changes to Venezuela's commercial frameworks, legal system and hydrocarbon laws were needed, but also expressed confidence that the Trump administration and Venezuelan government would work together to put those changes in place. The president has been pushing American energy companies to invest in Venezuela, saying the US Would provide security guarantees. We are exclusively reporting that House Republicans are backing a stock trading crackdown that would prohibit members of Congress from buying individual stocks. The draft bill set to be introduced today would address concerns about lawmakers potentially profiting from insider trading. Under the plan, lawmakers would still be allowed to buy and sell diversified investment funds and wouldn't be required to sell any stocks they already own, but they would have to file a public notice ahead of selling an individual stock. The proposal would also boost penalties if lawmakers fail to follow the guidelines. And shares of America's leading banks are trending lower today after President Trump on Friday called for a 10% cap on credit card interest rates. Credit card rates average around 23%, according to the Federal Reserve. Borrowers in lower and middle income households would benefit the most from a 10% cap, but experts say they'd also be the first ones that banks would stop lending to. The American Bankers association and other industry groups said that Trump's proposal would hurt families and small business owners by driving them toward less regulated alternatives. And that's it for what's news for this Monday morning. Today's show was produced by Hattie Moyer and Daniel Bock. Our supervising producer was Sandra Kilhoff. And I'm Luke Vargas for the Wall Street Journal. We will be back tonight with a new show. Until then, thanks for listening.