Judge quashes subpoenas in Justice Department’s investigation of Fed chair Jerome Powell

WASHINGTON (AP) — A federal judge on Friday quashed Justice Department subpoenas issued to the Federal Reserve in January, a severe blow to an investigation that has already attracted strong criticism on Capitol Hill.

The investigation into testimony last June by Chair Jerome Powell about a $2.5 billion building renovation has also delayed Senate consideration of Kevin Warsh, President Donald Trump’s pick to replace Powell when his term ends May 15.

Judge James Boasberg said that the government has “produced essentially zero evidence to suspect Chair Powell of a crime” and called its justifications for the subpoenas so “thin and unsubstantiated” that they were simply a pretext to force Powell to cut rates, as Trump has repeatedly demanded.

“There is abundant evidence that the subpoenas’ dominant (if not sole) purpose is to harass and pressure Powell either to yield to the President or to resign and make way for a Fed Chair who will,” he wrote.

The unprecedented investigation into Powell and the Fed is the latest in a series of moves by the Trump administration pressure the central bank, which has for decades been considered as independent from day-to-day politics. Trump has also sought to fire Lisa Cook, a member of the Fed’s governing board, after a member of his administration accused her of mortgage fraud, though no charges were ever filed. The Supreme Court has blocked Cook’s firing for now.

Boasberg’s ruling blocks U.S. Attorney Jeanine Pirro, who issued the subpoenas, from obtaining records from the Fed related to the building renovation. Pirro blasted the ruling at a news conference and said she would appeal it.

Pirro said an “activist judge” has quashed the subpoenas, and has “neutered the grand jury’s ability to investigate crime“ and leaves Powell “bathed in immunity.”

“This is wrong and it is without legal authority,” she said.

The Justice Department’s investigation centers on testimony last June by Powell before the Senate Banking Committee, when he was asked about cost overruns on the Fed’s extensive building renovations. The most recent estimates from the Fed suggest the current estimated cost of $2.5 billion is about $600 million higher than a 2022 estimate of $1.9 billion.

Powell at the time disputed that the renovation included “rooftop gardens … VIP elevators” and other amenities. But administration officials charged that earlier construction plans included some of those features, suggesting Powell was either lying or hadn’t filed updated building plans.

Pirro, in her news conference, said she wanted to investigate “an atrocious cost overrun of $1 billion” but has so far been thwarted from doing so by Boasberg’s decision.

Powell revealed the investigation in an unprecedented video Jan. 11, which prompted Senator Thom Tillis, a North Carolina Republican and member of the Banking committee, to block consideration of Warsh until the investigation is dropped.

Tillis said the ruling confirmed “just how weak and frivolous the criminal investigation of Chairman Powell is.” Tillis has vowed to blockade all Federal Reserve nominees until the criminal probe into Powell is dropped.

“We all know how this is going to end and the D.C. U.S. Attorney’s Office should save itself further embarrassment and move on,” Tillis said Friday. “Appealing the ruling will only delay the confirmation of Kevin Warsh as the next Fed Chair.”

Tillis has also said that he has compiled a list of seven members of the committee who were present the day Powell testified, and none considers themselves “victims” of a crime.

In his ruling, Boasberg said he offered to let the government submit further evidence against Powell directly to him, so that they wouldn’t have to tip their hand to the Fed or Powell. But the government declined to submit evidence under those conditions.

“The Court is thus left with no credible reason to think that the Government is investigating suspicious facts as opposed to targeting a disfavored official,” the judge wrote in his ruling.

Boasberg, who was nominated to the bench by Democratic President Barack Obama, has been at odds with the White House on other legal fronts since Trump returned to office last January. The Justice Department sought Boasberg’s removal from a high-profile case in Washington after he barred the Trump administration from carrying out a wave of deportation flights under wartime authorities from an 18th-century law.

Trump called for Boasberg’s impeachment, calling him an unelected “troublemaker and agitator.” The president’s searing criticism of Boasberg prompted a rare rebuke from Chief Justice John Roberts, who rejected calls for impeaching judges.

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AP Writers Michael Kunzelman, Alanna Durkin Richer, and Seung Min Kim contributed to this report.

Christopher Rugaber, The Associated Press