Powell criminal probe upends Trump's search for a new Fed chair

• President Donald Trump's efforts to replace Jerome Powell have taken a shocking turn.

• The Fed chair revealed that he is under a criminal investigation, a probe he views as retaliatory in nature.

• In the meantime, Trump continues to mull who he will name to replace Powell.

President Donald Trump's search to replace Federal Reserve chair Jerome Powell has taken a major turn in the new year.

On Sunday, Powell confirmed an explosive report that he is facing a criminal investigation related to his prior testimony to Congress about the $2.5 billion renovation to the Fed's headquarters.

In a video statement, Powell said that the probe was in retaliation for his decision to ignore Trump's wishes on rate cuts.

"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.

Trump told NBC News that he had nothing to do with the grand jury subpoenas sent to the Fed, adding that Powell is "certainly not very good at the Fed, and he's not very good at building buildings."

News of the probe has complicated Trump's path to replacing Powell, whose term ends in May.

Here's where Trump's search stands and who is on top of his list.

Kevin Hassett

Kevin Hassett, one of Trump's top economic advisors, has long been considered a likely pick to replace Powell.

As of January, Hassett is tied with Kevin Warsh, a former Fed governor, at 40% for the odds of being Trump's pick at both Kalshi and Polymarket.

Asked about the criminal probe into Powell, Hassett said it made sense to investigate why the Fed's renovations overran their initial cost estimates. (The Fed has said costs went up due to changes in design, the increase in cost of materials, and unforeseen complications such as a larger amount of asbestos than anticipated.)

"I think that it's really important to understand where the taxpayer money goes, and understand why it goes this way or that," Hassett told reporters outside the White House on January 12.

Before joining Trump's orbit, Hassett advised a succession of Republican presidential nominees on economic policy, including George W. Bush, John McCain, and Mitt Romney.

During Trump's first term, Hassett served as director of the president's Council of Economic Advisors. He returned to the White House during the COVID-19 pandemic and was severely criticized for publishing a model showing coronavirus deaths hitting zero by May 15, 2020.