Bessent unhappy with criminal investigation of Fed Chair Jerome Powell

(CNN) — Treasury Secretary Scott Bessent has told people that he is unhappy with the decision to criminally investigate Fed Chair Jerome Powell, a source with knowledge of the matter told CNN.

Bessent has expressed concern that the decision will negatively impact the markets. He has warned President Donald Trump in the past that firing Powell would also cause volatility in the markets – though that did not appear to be the case Monday.

The investigation – which drew bi-partisan criticism after it was first revealed on Sunday evening – centers on Powell’s June testimony before Congress about the central bank’s $2.5 billion renovation of its headquarters in Washington, DC. Powell himself responded with an extraordinary video statement in which he revealed the Federal Reserve had been served Friday with grand jury subpoenas “threatening a criminal indictment” and alleged the probe was sparked by his ongoing battle with the president over interest rates.

“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,” Powell said in a statement.

Bessent’s frustration was first reported by Axios, which said he had told Trump late Sunday that the federal investigation into Powell “made a mess.” CNN has reached out to the Treasury Department for comment. Some administration officials insisted the Department of Justice’s unprecedented move was not political — and stressed that there was more investigating to do into Powell’s testimony. Jeanine Pirro, the US Attorney for the District of Columbia, said in a post on X that her office had “contacted the Federal Reserve on multiple occasions to discuss cost overruns and the chairman’s congressional testimony, but were ignored, necessitating the use of legal process—which is not a threat.”

“The word ‘indictment’ has come out of Mr. Powell’s mouth, no one else’s,” Pirro wrote. “None of this would have happened if they had just responded to our outreach. This office makes decisions based on the merits, nothing more and nothing less. We agree with the chairman of the Federal Reserve that no one is above the law, and that is why we expect his full cooperation.”

Trump and Powell have long sparred over interest rates, and the president has publicly toyed with firing his Fed chair – a move economists worried would undermine the institution’s historic independence and have potentially serious economic consequences. In an interview with NBC News on Sunday, Trump denied knowledge of the investigation, saying, “I don’t know anything about it, but he’s certainly not very good at the Fed, and he’s not very good at building buildings.”

But Russell Vought, Trump’s director of the Office of Management and Budget (OMB), had previously accused Powell of breaking the law by failing to comply with government oversight regulations and lying to Congress about details of the planned renovation of the Fed’s headquarters. And Trump himself publicly sparred with Powell over the renovation’s price tag in a public tour in July.

The revelation of the probe sparked some outrage on Capitol Hill. Republican Sen. Thom Tillis, a member of the banking committee, said in a post on X that he would “oppose the confirmation of any nominee for the Fed—including the upcoming Fed Chair vacancy—until this legal matter is fully resolved.” (Tillis is not seeking reelection.) GOP Sen. John Kennedy, another banking committee member, told reporters Monday that he would be “stunned” if Powell “did anything wrong.”

GOP Sen. Lisa Murkowski said the investigation was an “attempt at coercion” by the Trump administration and suggested it may warrant a congressional probe into the Justice Department. And Senate Majority Leader John Thune suggested that the move could complicate his chamber’s ability to replace Powell this spring, while repeatedly stressing he wants to see the Fed operate “free of politics.”

There appeared to be little to no reaction on the markets, at least initially. On Monday, the Dow closed higher by 86 points, or 0.17%, recouping losses after falling almost 500 points earlier. The broader S&P 500 rose 0.16% and closed at a record high. The tech-heavy Nasdaq Composite gained 0.26%.

The-CNN-Wire
™ & © 2026 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.

CNN’s Ted Barrett, Sarah Ferris, Bryan Mena, Manu Raju, Morgan Rimmer and Samantha Waldenberg contributed to this report.