- Key Insight: U.S. District Judge James Boasberg wrote in documents unsealed Friday that the Trump administration produced no evidence to suspect Federal Reserve Chair Jerome Powell of a crime, justifying the tossing of the subpoenas. The Justice Department said it would challenge the decision.
- Expert quote: “The Government has produced essentially zero evidence to suspect Chair Powell of a crime; indeed, its justifications are so thin and unsubstantiated that the Court can only conclude that they are pretextual.” — U.S. District Judge James Boasberg.
- What’s at stake: The probe into Federal Reserve Chair Jerome Powell complicates the confirmation of Kevin Warsh, who has been tapped to lead the central bank, as several lawmakers say they will delay the process until any charges against the current Fed chief are dropped.
A federal judge dismissed a probe into Federal Reserve Chair Jerome Powell over renovations at the central bank, according to documents unsealed Friday.
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The move creates an additional hurdle in President Donald Trump’s attempt to remove Powell from the central bank. The Justice Department said Friday it would appeal the decision.
U.S. District Judge James Boasberg wrote in an opinion that the Trump administration had not revealed any evidence to suggest Powell had committed a crime, noting that a “mountain of evidence” instead suggests the effort was a pressure campaign to push Powell to lower interest rates or resign.
“The Government has produced essentially zero evidence to suspect Chair Powell of a crime; indeed, its justifications are so thin and unsubstantiated that the Court can only conclude that they are pretextual,” wrote Boasberg. “The Court therefore finds that the subpoenas were issued for an improper purpose and will quash them.”
U.S. Attorney for the District of Columbia Jeanine Pirro called the decision “outrageous” and said the Justice Department would appeal.
“This decision by Judge Boasberg runs directly afoul of our highest court’s admonition that courts and judges must not and cannot saddle grand juries with many trials and preliminary showings that impede a prosecutor’s investigation and thus frustrate the public’s interest in the fair and expeditious administration of justice,” said Pirro during a press conference Friday. “No one, folks, is above the law, and this outrageous decision will be appealed by the United States Department of Justice.”
The Justice Department launched an investigation into Powell in January over his testimony last June concerning ongoing renovations at the Federal Reserve headquarters.
“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 in the message. “This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions — or whether instead monetary policy will be directed by political pressure or intimidation.”
The Justice Department’s plan to challenge the decision could further
Several lawmakers said they would delay confirming anyone to the Fed until the threat of criminal charges against Powell is dropped. Sen. Thom Tillis, R-N.C., a key vote on the Senate Banking Committee, has repeatedly said he would block any Fed nomination until the Justice Department’s investigation into Powell ends, and
“This ruling confirms just how weak and frivolous the criminal investigation of Chairman Powell is and it is nothing more than a failed attack on Fed independence,” Tillis said. “Appealing the ruling will only delay the confirmation of Kevin Warsh as the next Fed Chair.”
Jaret Seiberg, an analyst with TD Cowen, said the ruling and Pirro’s moves to appeal increases the odds that Powell remains at his post as Fed Chair after his term expires on May 15.
“This also increases the probability that Powell remains at the Fed as a governor even if Warsh is confirmed as chair,” Seiberg wrote. “One document unsealed today included a reference to Powell’s lawyer saying his client would stay at the Fed as long as the probe was ongoing. It also suggested Powell would depart on May 15 if the investigation was terminated.”
Answering questions after the press conference, Pirro declined to comment on how the Justice Department’s appeal could affect Warsh’s confirmation process.
“We are focused on the law,” she said. “We’re focused on the people of the district. We are not focused on politics.”