Unprecedented DOJ Probe of Fed Chair Powell Draws Unified Condemnation from Former Fed Chiefs; UBS CEO Signals 2027 Exit

This analysis is based on a breaking news event published on January 13, 2026 [1], covering two significant developments in global finance: an unprecedented political confrontation over Federal Reserve independence and a major succession event at Europe’s largest bank.

Federal prosecutors from the U.S. Attorney’s Office in Washington D.C. have opened a criminal investigation into Fed Chair Jerome Powell related to his congressional testimony concerning a $2.5 billion headquarters renovation project [2][3]. The investigation was approved in November 2025, with grand jury subpoenas served to the Federal Reserve.

Powell publicly confirmed the investigation on January 11, 2026, via video statement, directly attributing the probe to political retaliation: “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” President Trump [2][3].

The joint condemnation carries extraordinary weight:

• Former Fed Chairs:
  Janet Yellen, Ben Bernanke, Alan Greenspan [4]
• Former Treasury Secretaries:
  Timothy Geithner, Jack Lew, Henry Paulson, Robert Rubin [4]

The statement characterized the DOJ actions as resembling “emerging markets with weak institutions”—a stark warning about erosion of central bank credibility [4].

Initial market response on January 12 was muted, with S&P 500 up 0.48% and NASDAQ up 0.67% [0]. However, the full implications for institutional credibility and monetary policy independence may take time to materialize in asset prices.

UBS CEO Sergio Ermotti has signaled plans to depart in April 2027, aligned with the substantial completion of Credit Suisse integration by end of 2026 [6][7]. Ermotti returned to UBS in 2023 specifically to oversee this integration.

The succession race includes several senior executives [6][7]:

• Aleksandar Ivanovic
  (Asset Management)
• Iqbal Khan
  (Asia-Pacific)
• Robert Karofsky
  (Americas)
• Bea Martin
  (Chief Operating Officer)

Chair Colm Kelleher is reportedly targeting a “bloodless coup” transition similar to Morgan Stanley’s recent orderly handoff [7].

The Powell investigation represents a qualitative shift in U.S. political-monetary relations. Using criminal investigation powers against a central bank chair over ostensibly administrative matters—when the chair himself states it’s retaliation for monetary policy—creates a dangerous precedent that markets have not yet fully priced [3][4].

Powell’s term as Fed Chair expires May 2026, with his board seat extending to January 2028. The timing of this investigation, just months before his chairmanship ends, suggests political pressure to influence either his remaining decisions or his successor’s appointment [3].

UBS’s orderly succession planning contrasts sharply with U.S. institutional turbulence. However, the incoming CEO will inherit a $24 billion capital requirement dispute with Swiss regulators, complicating strategic flexibility [7].

The unified response from former Fed and Treasury leaders signals deep institutional alarm. If markets begin pricing a structurally compromised central bank, effects could include:

• Elevated Treasury term premia
• Dollar volatility
• Increased hedging costs for interest rate-sensitive sectors

• Potential for volatility-based strategies as institutional uncertainty unfolds
• UBS succession clarity may support valuation stability once new CEO confirmed
• Credit markets may offer value if spreads overshoot on headline risk

• Criminal probe targeting Fed Chair over $2.5B renovation testimony
• Powell directly attributes investigation to political retaliation over rate policy
• Unprecedented joint statement from all living former Fed Chairs and four former Treasury Secretaries
• Powell’s chairmanship ends May 2026; board term extends to January 2028

• Ermotti departure planned for April 2027
• Credit Suisse integration substantially complete by end of 2026
• Four internal candidates identified; orderly transition expected
• $24B capital requirement dispute with Swiss regulators remains unresolved

• Initial equity market reaction muted (S&P +0.48%, NASDAQ +0.67%) [0]
• Bond and currency markets bear watching for delayed institutional credibility repricing