The puppeteer behind the subpoena of Powell emerges: It is rumored to be Trump's "favorite" FHFA director Pulte, who also once "denounced" director Cook.

According to informed sources, Bill Pulte, the director of the Federal Housing Finance Agency (FHFA), was the behind-the-scenes force behind the Trump administration's decision to subpoena Federal Reserve Chairman Powell, exacerbating the pressure facing the Federal Reserve. Earlier, Powell stated that the U.S. Department of Justice had issued a grand jury subpoena to the Federal Reserve, threatening criminal prosecution for his testimony in June 2025 before Congress regarding the renovation work at the Federal Reserve headquarters. Media reports citing details revealed by sources indicated that federal prosecutors have opened a criminal investigation into Federal Reserve Chairman Powell, involving the Federal Reserve's multi-billion dollar headquarters renovation project. In a statement released late Sunday evening Eastern Time, Powell denied any connection between the subpoena and his testimony or renovation project, revealing his defiance by stating that the criminal subpoena was a "political pretext" and that he would resist Trump's pressure. Some of Trump's allies are concerned about this move, fearing that legal action against Powell could disrupt the bond market. They are also concerned that this move could hinder Powell from leaving after stepping down as Federal Reserve chairman in May. Powell can continue to serve as a Federal Reserve Board member until 2028, and, according to convention, he has not indicated whether he intends to resign. Pulte, known for his calm demeanor, is a significantly influential figure within the Trump administration, actively promoting controversial housing policies and investigating Trump's political opponents for alleged mortgage fraud. Previously, Pulte submitted a criminal complaint to the Department of Justice regarding Federal Reserve Board member Lisa Cook, which provided favorable grounds for Trump's attempted dismissal of Cook. The U.S. Supreme Court is set to hear Cook's case later this month. A senior U.S. government official stated that it was the Department of Justice and not Pulte's law firm that was the force behind the subpoena, which was related to Powell's congressional testimony about the Federal Reserve building renovation. According to informed sources, the investigation is being led by the federal prosecutor's office in the District of Columbia. According to informed sources, U.S. Attorney Jenny Piero of the District of Columbia has approved an investigation into Powell. A source who wished to remain anonymous stated that U.S. Attorney General Pam Bondi has instructed U.S. prosecutors' offices to investigate potential cases of misuse of taxpayer funds. Piero, a long-time ally of Trump, was appointed to head the office last year. This investigation marks the opening of a significant new legal front against Powell. According to some sources, some of Trump's senior aides only learned of the subpoena when Powell received it on Friday evening. On Sunday, Trump denied knowledge of the Department of Justice's investigation into the central bank during a news interview. Pulte accompanied Trump to Palm Beach, Florida last Friday evening. He is a member of the Mar-a-Lago Club, and whenever Trump is in Palm Beach on weekends, he frequents the club and Trump's nearby private golf course. Trump's aides and allies are weighing the actions against Powell and the potential unforeseen consequences they may bring. One issue is how Wall Street will respond, as the bond market may perceive this as a threat to the Federal Reserve's independence. Additionally, this casts a shadow over Trump's efforts to replace Powell with a new Fed chairman. Trump stated that he has made a decision on the next Fed chairman but has not announced it publicly yet. Popular candidates include Kevin Hassett, director of the National Economic Council, and Kevin Warsh, former Federal Reserve Board member. The subpoena has drawn strong criticism from Democrats and Republican Senator Thom Tillis of North Carolina. Senate Banking Committee member Tillis said, "If there was any doubt before about whether advisers within the Trump administration were actively pushing to end the independence of the Fed, there should be none now. What is now in question is the independence and credibility of the DOJ." Tillis stated that he would oppose the confirmation of any nominee for Federal Reserve chairman until "this legal issue is resolved." A Republican senator's opposition could delay or even prevent the Senate from confirming Trump's nominee for Federal Reserve chairman, a necessary step for them to assume the role. This unprecedented move by the Trump administration marks a full escalation of the long-standing dispute and interest rate tug-of-war between Trump and the Federal Reserve Chairman. Upon returning to the White House, President Trump has long called for significant interest rate cuts, even suggesting lowering rates to 1% or lower. The current U.S. benchmark interest rate, the Federal Fund rate, is in the range of 3.5%-3.75%. Following unprecedented political pressure on the independence of the Federal Reserve, risk aversion sentiment in financial markets significantly increased on Monday, with spot gold prices hitting a historic high.