WASHINGTON— A federal judge has blocked a pair of Justice Department subpoenas aimed at the Federal Reserve in connection with a criminal probe of Chair Jerome Powell, ruling the government offered virtually no evidence of wrongdoing and finding the subpoenas appeared designed primarily to harass Powell and pressure him over monetary policy.
Chief U.S. District Judge James Boasberg, in an opinion unsealed Friday, said the record showed the subpoenas were improperly issued as part of what he described as a politically driven effort rather than a legitimate criminal inquiry, Reuters reported.
The subpoenas were tied to the Justice Department’s investigation into Powell’s congressional testimony regarding the Federal Reserve’s roughly $2.5-billion headquarters renovation project, a probe led by U.S. Attorney Jeanine Pirro. Boasberg wrote that the government had produced “essentially zero evidence” that Powell committed a crime and said there was “abundant evidence” the dominant purpose was to pressure him to cut interest rates or step aside, according to accounts of the ruling.
The ruling is already rippling through Washington, where the investigation had drawn bipartisan criticism and complicated the politics around Powell’s eventual successor. Reuters reported the Justice Department plans to appeal, while separate coverage said the dispute has delayed Senate consideration of President Trump’s pick to replace Powell, Kevin Warsh, with Sen. Thom Tillis among Republicans objecting to the probe as a threat to Federal Reserve independence.
The decision marks a significant setback for the Administration’s effort to scrutinize Powell and the Fed, while intensifying a broader fight over the central bank’s independence at a time when Trump has repeatedly attacked Powell over interest-rate policy. The Federal Reserve had enlisted outside counsel, including former special counsel Robert Hur, in the subpoena fight, according to Reuters, underscoring how seriously the institution viewed the legal challenge.