Judge Upholds Block on Subpoenas in Criminal Probe of Federal Reserve Chair Jerome Powell
In a significant legal development, a U.S. judge on Friday reaffirmed his prior decision to block subpoenas issued as part of a criminal investigation into Federal Reserve Chair Jerome Powell. This ruling sets the stage for a probable appeal that could further postpone President Donald Trump's efforts to install a more compliant leader at the helm of the central bank.
Judge Boasberg Rejects Justice Department's Bid for Reconsideration
Chief U.S. District Judge James Boasberg, presiding in the District of Columbia, dismissed the Justice Department's motion to reconsider his earlier ruling, which had effectively halted the criminal probe into Powell. In his March 13 decision, Judge Boasberg determined that the subpoenas, issued to the Fed's Board of Governors in January, were improperly aimed at pressuring Powell to acquiesce to Trump's demands for rapid interest rate cuts or to resign from his position.
Background of the Subpoenas and Investigation
The subpoenas were issued by Washington D.C.'s top federal prosecutor, Jeanine Pirro, a staunch ally of President Trump. They sought information regarding cost overruns in renovations at the Federal Reserve's headquarters and Powell's testimony to Congress last year about the project. This ruling marks another victory for Powell in his ongoing conflict with Pirro's office, which he has characterized as a pretext for Trump to exert greater influence over the Fed and its monetary policy decisions.
Potential Appeal and Political Implications
Prosecutor Pirro has vowed to continue the investigation and indicated that her office is prepared to appeal to the U.S. Court of Appeals for the D.C. Circuit. Justice Department leadership has supported this decision to appeal, according to a source familiar with the matter. The appeal process could delay the confirmation of Kevin Warsh, Trump's nominee to succeed Powell as Fed chair. Senator Thom Tillis, a Republican member of the Senate Banking Committee who has criticized the probe into Powell, has pledged to block Warsh's nomination while any appeal is underway.
Powell's Stance and Legal Challenges
Powell has committed to remaining at the central bank until the investigation concludes. Prosecutors have stated they are investigating Powell for potential fraud charges and false statements to a congressional committee. However, a top lawyer in Pirro's office acknowledged in court on March 3 that prosecutors currently lack evidence of any crime committed by Powell, as per a court transcript. To overturn Judge Boasberg's decision, Pirro's office faced a high legal threshold, needing to demonstrate either new evidence or a clear legal error by the judge.
Arguments from Both Sides
Justice Department lawyers contended that Judge Boasberg set an excessively high standard for prosecutors to meet in the early stages of an investigation and misinterpreted the timeline of the probe. In contrast, lawyers representing the Fed's Board of Governors argued that Boasberg's initial ruling was supported by overwhelming evidence, reinforcing the judge's stance on the improper motives behind the subpoenas.
