Powell bajo asedio: la investigación del Departamento de Justicia marca el final de la guerra en curso contra la Fed por parte de la Casa Blanca.

• Criminal Probe Escalates Fed Feud: The U.S. Attorney's Office has opened a formal inquiry into Chair Powell over the central bank's $2.5 billion headquarters renovation, alleging potential perjury regarding cost overruns.

• Manufacturing "Cause": The legal offensive appears designed to satisfy the strict statutory requirements for removing a Fed Chair, circumventing protections that traditionally shield the role from policy-based firing.

• Succession Plan in Motion: With Powell's term ending in May, the White House is preparing to pivot to a loyalist leadership, with former economic adviser Kevin Hassett emerging as the front runner to replace him.

• Institutional Independence at Risk: The move marks a historic breach of the firewall between the Justice Department and monetary policy, raising long-term questions about the Federal Reserve's autonomy from executive pressure.

The firewall separating the White House from the Federal Reserve has not just been breached; it has been demolished by a subpoena.

News that the U.S. Attorney's Office for the District of Columbia has opened a criminal inquiry into Federal Reserve Chair Jerome Powell—ostensibly over construction costs—is the most aggressive executive assault on the central bank since the Nixon era. While the Department of Justice's filings focus on marble facades and cost overruns, the subtext for global markets is unambiguous: The administration is weaponizing the legal code to break the Fed's resistance to lower interest rates.

For bond traders and constitutional scholars alike, the question is no longer if President Trump will attempt to force a change in monetary leadership before Powell's term expires in May, but whether the institution can survive the transition intact.

The "Marble" Indictment

The investigation, helmed by U.S. Attorney Jeanine Pirro, centers on the massive modernization project of the Fed's Marriner S. Eccles Building and the neighboring 1951 Constitution Avenue property. Originally budget at $1.9 billion, the costs have swelled to over $2.5 billion—a figure the White House has frequently inflated to $3.1 billion in public broadsides.

Prosecutors are reportedly building a case that Powell perjured himself during congressional testimony last June. When pressed on the ballooning budget, Powell famously retorted, "There's no V.I.P. dining room; there's no new marble." He characterized the project as a grim necessity involving asbestos abatement and antiquated electrical systems rather than opulence.

However, the "cause" for removal—a legal standard President Trump must meet to fire a Fed governor—requires proof of "inefficiency, neglect of duty, or malfeasance." By framing the renovation mismanagement as criminal deception, the DOJ is attempting to manufacture the legal "cause" that mere policy disagreements over interest rates fail to provide.

The optics are tailored for a populist attack: The administration is contrasting the "luxury" of the central bank's headquarters with the economic pain of high borrowing costs for average Americans. It is a narrative that sidesteps complex monetary theory in favor of a simpler story of bureaucratic waste.

A Pattern of "Cleaning House"

The inquiry into Powell is not an isolated skirmish; it is part of a broader campaign to reshape the Federal Reserve's Board of Governors before the midterms.

The administration's parallel effort to oust Governor Lisa Cook on allegations of mortgage fraud—a case headed to the Supreme Court later this month—demonstrates a concerted strategy to clear the deck. If both Powell and Cook were removed, the President could effectively remake the Federal Open Market Committee (FOMC) in a single year, replacing hawkish holdovers with loyalists committed to pro-growth monetary expansion.

This coordination suggests that the renovation probe is less about fiscal responsibility and more about personnel management. As legal experts have noted, firing a Fed Chair for policy views is constitutionally dubious. Firing him for allegedly lying to Congress about spending, however, provides a cleaner narrative for the history books.

The Hassett Era Looms

The timing of the leak is precise. With Powell's chairmanship concluding in May, the White House is signaling that it wants a seamless—and perhaps early—handover.

Kevin Hassett, the President's top economic adviser and former Council of Economic Advisers chair, has recently re-emerged as one of the frontrunner to succeed Powell.

According to a recent interview of Trump, Trump has hinted that even though he is not willing to announce the result this soon, yet he described Hassett as "one of the people he likes" for the next chair.

Hassett has been a vocal critic of the Fed's "black box" operations and has argued that the central bank should be more responsive to the "wisdom" of the democratically elected executive branch.

A Hassett-led Fed would likely move rapidly to slash rates, aligning monetary policy with the administration's re-industrialization goals. For equity markets, this promises a short-term sugar high. For the bond market, however, the politicization of the Fed brings the specter of unanchored inflation expectations. If the Fed is viewed as an arm of the Treasury, the "bond vigilantes" of the 1990s may return with a vengeance, demanding higher yields to offset the risk of political dominance.

The Market verdict

The immediate reaction to the DOJ inquiry has been a flight to safety, ironically driving Treasury yields lower as investors digest the chaos. But the long-term implication is the erosion of the dollar's premier status. The U.S. central bank's credibility rests on its insulation from short-term political pressures.

By opening a criminal inquiry into the Chair over building renovations, the administration has crossed a Rubicon. The message to future Fed chairs is clear: diverge from the White House at your own peril. The Eccles Building may be getting a physical renovation, but the institution inside is facing a structural demolition.