A storm of frustration is brewing within the White House, with officials pointing fingers at DC US Attorney Jeanine Pirro for her handling of the criminal investigation into Fed Chair Jerome Powell. This investigation has not only blindsided the administration but has also forced them into a prolonged damage control campaign, according to four sources familiar with the matter.
The revelation of the criminal probe earlier this week sent shockwaves through senior officials across the government. Inside the White House, a scramble ensued to calm markets, reassure lawmakers, and create distance between President Donald Trump and the investigation, despite Trump's own vocal criticism of Powell in the past.
Trump's attempts to engineer criminal investigations against his political foes are no secret. However, the investigation into Powell has disrupted the White House's plans for a peaceful final term, raising concerns about potential obstacles in confirming a new Fed chair who might be more amenable to Trump's economic agenda.
Powell himself issued a remarkable statement, confirming his office had received grand jury subpoenas and framing the probe as an attempt by Trump to pressure him into lowering interest rates. Even Trump's Treasury Secretary Scott Bessent expressed frustration with the move. Multiple Republican senators, including Sen. Thom Tillis of North Carolina, have criticized the investigation, with Tillis vowing to withhold his vote on any nominee to replace Powell until the inquiry is resolved.
"Until this matter is resolved, I'm not considering anybody," Tillis stated. "I wouldn't consider my mother for the post under the current conditions."
Trump, in an interview with NBC News, denied knowledge of the investigation, criticizing Powell's performance at the Fed and in building construction. When asked about the probe on Tuesday, Trump largely reiterated his attacks on Powell and defended his push for lower interest rates. Notably, Office of Management and Budget Director Russ Vought had previously invoked Trump's name in a letter questioning Powell's congressional testimony on a Fed headquarters renovation project, which is now part of the federal investigation.
Trump has shown no overt anger towards Pirro since the probe was made public. However, at a White House event last week, he delivered a critical lecture to a group of US Attorneys, suggesting some were weak and ineffective, and making it harder for Attorney General Pam Bondi and Deputy Attorney General Todd Blanche to do their jobs, according to a source familiar with the matter.
Trump's frustration with the Department of Justice for not prosecuting his political foes quickly enough has intensified in recent weeks. Sources told CNN that Trump has complained about both the US attorneys in specific jurisdictions and Bondi for not following through on investigations into perceived enemies like California Senator Adam Schiff. Trump was also frustrated that prosecutors couldn't re-charge former FBI Director James Comey after a judge dismissed the original case.
Trump's aides and allies expressed significant frustration with Pirro, believing she had disrupted efforts to curb the president's attacks on Powell. Aides have also pointed to top housing official Bill Pulte, a vocal Powell critic, who had been pushing for an investigation, including presenting Trump with a "wanted" poster of the Fed chair, according to a White House official.
Pirro stated that her office had previously tried to contact the Fed but was ignored, necessitating the use of "legal process - which is not a threat." Her office did not respond to a request for comment on Tuesday.
Pulte denied involvement in the Powell investigation, and White House communications director Steven Cheung described Pulte as "one of the President's most loyal and important advisers."
Trump has frequently criticized Powell for being too slow to cut rates, deriding him for tempering economic growth and even musing about firing him. Senior officials, including Bessent, had successfully persuaded Trump not to take action against Powell, arguing it would cause market turmoil and that Powell's term was due to end in May anyway.
Since then, Bessent has been guiding the selection process for Trump's new Fed chair nominee, with an official announcement expected in the coming weeks.
However, the Pirro-led inquiry into Powell now threatens to complicate this timeline, casting further doubt on the administration's claims of respecting the Fed's independence.
After opening the investigation in November, Pirro's office sent two emails to Federal Reserve staff over the December holidays, seeking conversations. These messages did not explicitly mention a criminal investigation or the possibility of issuing a subpoena over the Fed's renovation or Powell's congressional testimony, according to a source.
Within days of those initial emails, which Fed staff had not yet responded to, Pirro's office served the central bank with a subpoena. This move prompted Powell to release a video response, describing the probe as "unprecedented" and a consequence of the Fed setting interest rates based on its assessment rather than the president's preferences.
Trump aides and allies were alarmed by the rapid escalation, questioning the wisdom of pursuing the criminal probe and the likelihood of finding substantial evidence of wrongdoing.
"Whether there's fraud involved is perhaps worth investigating, but why not wait until after he's out?" said Stephen Moore, a former economic adviser to Trump. "It's not healthy, this kind of bitter rivalry between Trump and Powell."
The move also gave Powell an opportunity to go on the offensive. After receiving the subpoena, the Fed chair decided the situation was serious enough to disclose publicly, according to a source.
He released his video response, which quickly circulated among political and economic circles, prompting an outpouring of support from allies on both sides of the aisle and putting the White House on the back foot.
A rapid response came from a bipartisan group of former Fed chairs and Treasury secretaries, who collectively decried the investigation in a flurry of text messages that night. The resulting statement, which Powell had not requested, warned of attempts to "use prosecutorial attacks to undermine" the Fed. It was signed by every living former Fed chair and a bipartisan group of former Treasury secretaries and chairs of the Council of Economic Advisers.
"This is just about as simple as it gets," said a Powell ally, adding that beyond concerns about the Fed as an institution, Powell is also trusted and well-liked in Washington. "There's just an enormous benefit of the doubt that people are willing to grant him, and there is not an enormous benefit of the doubt that people are willing to grant Donald Trump and the Justice Department."
Amid the backlash, some Trump officials now wonder if Powell will decide to stay at the Fed beyond the end of his term as chair, a move that could prevent Trump from filling the seat until 2028, according to two sources.
Up until now, Powell had no desire to stay, the Powell ally said. But now, "I would not be quite so quick to say that. I think that he might want to in some way, just out of spite."
CNN's Alayna Treene contributed to this report.
