A federal judge on Friday blocked the justice department from serving subpoenas to Federal Reserve chair Jerome Powell in an inquiry purported to be about the management of the central bank’s renovation.
Powell disclosed the surprise investigation on 11 January, and described the move as a threat to Fed independence and part of the Trump administration’s attempts to pressure the Fed to cut rates.
The judge agreed, saying a “mountain of evidence” suggests the investigation was to pressure the Fed chair to lower 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,” chief judge James Boasberg of the DC district court wrote on Friday.
Tom Tillis, a Republican US senator, said on Friday an appeal by the Trump administration in a justice department case involving Powell “will only delay the confirmation of Kevin Warsh as the next Fed chair”.
Tillis is part of a small group of Republicans who voiced opposition to the justice department’s investigation, and he has vowed to vote against Trump’s nomination of Warsh to replace Powell until Powell’s investigation is clear.
Donald Trump has taken an increasingly hostile stance against Powell, who he appointed as Fed chair in 2018 during his first term. Over the last year, Trump has called Powell “stupid” and “too slow” for not bringing down interest rates, despite volatile market reactions to Trump’s attacks.
Last summer, Trump accused Powell of “fraud” over renovations at the Fed headquarters in Washington DC that went over budget. Powell denied the allegations and called the justice department’s investigation a “pretext” for pressuring the Fed to lower rates.
While Warsh appears willing to help carry out Trump’s agenda for lower interest rates, Powell’s term ends in May and the chair has not announced whether he will remain on the Federal Open Mark Committee (FOMC), the Fed board that sets interest rates. Though it’s standard for a Fed chair to leave the board completely after a term ends, Powell’s seat on the board technically expires in January 2028.
Meanwhile, the supreme court still has to rule on a case Fed governor Lisa Cook brought against Trump after the president tried to fire her last summer. At a court hearing in January, the court appeared resoundingly skeptical of giving the president so much power over the Fed given its influence over the economy.
Trump alleged that Cook committed mortgage fraud by listing multiple properties as her primary residence on mortgage applications, which would get her a better rate.
Cook has denied the allegations, and her lawyers have pointed out that other government officials, including US treasury secretary Scott Bessent, have made the same discrepancies. A supreme court ruling on Cook’s case is expected by June.
Reuters contributed reporting
