Judge dismisses Fed subpoenas, citing DOJ’s ‘essentially zero evidence’ against Powell, who indicates a possible future as board governor

On Friday, a federal judge invalidated subpoenas that the Justice Department had sent to the Federal Reserve back in January, delivering a significant setback to a probe that has already drawn heavy criticism from lawmakers on Capitol Hill.

This probe, which focuses on testimony given by Chair Jerome Powell last June regarding a $2.5 billion renovation project, has also stalled the Senate’s review of Kevin Warsh, whom President Donald Trump selected to succeed Powell when his current term concludes on May 15.

Judge James Boasberg stated that the administration has provided “essentially zero evidence to suspect Chair Powell of a crime.” He characterized the reasoning behind the subpoenas as so “thin and unsubstantiated” that they appeared to be merely a pretext to compel Powell to lower interest rates, a demand Trump has made repeatedly.

“There is ample evidence suggesting that the primary, if not exclusive, objective of these subpoenas is to intimidate and coerce Powell into either capitulating to the President or resigning to clear the path for a more compliant Fed Chair,” he wrote.

This extraordinary inquiry into Powell and the Federal Reserve represents the most recent effort by the Trump administration to exert pressure on the central bank, an institution historically insulated from daily political pressures. Additionally, Trump has attempted to dismiss Fed Governor Lisa Cook following accusations of mortgage fraud from an administration official, despite no charges being filed. Currently, the Supreme Court has intervened to prevent Cook’s firing.

The decision by Boasberg prevents U.S. Attorney Jeanine Pirro, the official who issued the subpoenas, from accessing Federal Reserve records concerning the building renovation. During a press briefing, Pirro criticized the ruling and announced her intention to appeal.

Pirro claimed that an “activist judge” had invalidated the subpoenas, thereby “neutering the grand jury’s ability to investigate crime” and leaving Powell “bathed in immunity.”

“This decision is incorrect and lacks legal basis,” she asserted.

The Justice Department’s inquiry is centered on Powell’s appearance before the Senate Banking Committee last June, where he addressed cost overruns for the Fed’s massive building upgrades. According to the latest Federal Reserve estimates, the projected cost has risen to $2.5 billion, which is approximately $600 million more than the $1.9 billion estimate from 2022.

At that time, Powell denied claims that the renovation project featured “rooftop gardens … VIP elevators” and similar luxuries. However, administration officials argued that earlier construction blueprints did include such amenities, implying that Powell had either been dishonest or failed to submit updated plans.

During her press conference, Pirro expressed her desire to probe “an atrocious cost overrun of $1 billion.” In a court document made public on Friday, the government stated it was looking into “possible fraud and false statements” committed by the Federal Reserve and Powell.

Pirro’s intention to appeal and persist with the investigation risks further postponing the Senate’s evaluation of Warsh’s nomination. Powell is permitted to stay on as Chair beyond May 15 if a successor has not yet been confirmed.

Powell disclosed the existence of the investigation in a rare video statement on January 11. This led Senator Thom Tillis, a Republican from North Carolina who sits on the Banking committee, to halt proceedings on Warsh’s nomination until the investigation is abandoned.

Tillis stated that the ruling demonstrated “just how weak and frivolous the criminal investigation of Chairman Powell is.” He has pledged to block all Federal Reserve nominees until the criminal inquiry into Powell is terminated.

“Everyone knows the outcome of this situation, and the D.C. U.S. Attorney’s Office ought to spare itself further humiliation and move forward,” Tillis remarked on Friday. “Pursuing an appeal will only serve to delay Kevin Warsh’s confirmation as the next Fed Chair.”

Tillis also noted that seven Republican senators on the banking committee have concluded that Powell committed no crime during his testimony in June.

Following a meeting with Warsh on Tuesday, Tillis remarked that Warsh “possesses impeccable credentials and a clear vision for maintaining the Fed’s independence while achieving its dual mandate”—the goals of maximum employment and stable prices. Nevertheless, he emphasized that he could not back Warsh until the investigation concludes.

Given the Republicans’ narrow 13-11 majority on the committee, Tillis has the power to prevent Warsh’s nomination from advancing to the full Senate, provided all Democrats vote against it.

In his decision, Boasberg mentioned that he proposed allowing the government to submit additional evidence against Powell directly to him, thereby avoiding the need to reveal their strategy to the Fed or Powell. However, the government refused to provide evidence under those terms.

“Consequently, the Court has no credible basis to believe that the Government is examining suspicious facts rather than targeting an official it disfavors,” the judge stated in his ruling.

A document unsealed on Friday contained a notable mention of a lingering question regarding Powell: whether he intends to step down from the Board of Governors when his tenure as Chair concludes. This detail appeared in a government filing responding to the Fed’s attempt to dismiss the subpoenas.

Powell holds a separate term as a Fed governor that runs until January 2028. While most previous chairs have resigned from the board upon concluding their term as chair, Powell has declined to specify his intentions. Staying on the board would allow Powell to prevent Trump from appointing a new governor.

Describing a discussion between a Federal Reserve attorney and Pirro, the filing noted that the Fed’s lawyer conveyed: “The Chair feels like he would not leave the board when his term as Chair expires, if he was still under investigation.”

The filing further stated that Powell would not promise to leave the board if the investigation were dropped, but added that “it would be a different look to the Chair if he was not facing criminal investigation and the Chair would be free to make a decision that would focus on his family.”

Appointed to the bench by former Democratic President Barack Obama, Boasberg has clashed with the White House on other legal matters since Trump assumed office in January. The Justice Department attempted to remove Boasberg from a prominent case in Washington after he stopped the Trump administration from executing mass deportations using wartime powers derived from an 18th-century statute.