Judge quashes Justice Dept.’s subpoenas targeting Federal Reserve chair

A federal judge in Washington threw a major roadblock into a criminal investigation of Jerome Powell, the Federal Reserve chair, quashing grand jury subpoenas issued to the central bank by federal prosecutors over renovations underway at its headquarters in Washington.

In a blistering 27-page decision unsealed Friday, the judge, James E. Boasberg, derided the U.S. attorney's office in Washington, led by Trump loyalist Jeanine Pirro, for pursuing a case against Powell when it appeared that its only reason to do so was President Donald Trump's desire to seek vengeance against him. Powell has long resisted calls from the White House to significantly lower borrowing costs, prompting a litany of attacks that has extended to the president's effort to fire another top official, Lisa D. Cook.

"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," Boasberg wrote.

He continued, "On the other side of the scale, the government has offered no evidence whatsoever that Powell committed any crime other than displeasing the president."

Boasberg's decision did not necessarily mean the end of Pirro's inquiry, but it did deal the investigation a devastating blow. If prosecutors intend to continue pursuing it, they would have to find other ways of obtaining evidence, like persuading a judge to issue a search warrant.

A fiery Pirro, appearing at a hastily called news conference in her office up the block from U.S. District Court in Washington, where Boasberg sits as the chief judge, said she planned to both appeal and file a motion requesting the judge to reconsider.

She also followed the bellicose lead of her boss, Trump, by attacking the judge, accusing him of harboring an animus toward the president and claiming that he had "neutered the grand jury's ability" to obtain information from the Federal Reserve about its expenditures.

"Jerome Powell today is now bathed in immunity, preventing my office from investigating the Federal Reserve," said Pirro, who asserted the subpoenas were issued because Powell ignored earlier requests for information. "This is wrong and it is without legal authority."

The exchange was the latest development in a three-sided battle among a top Trump ally determined to pursue a dubious legal course to placate the president, a Fed chair fighting for the independence of an institution whose stewardship is essential to the economy, and a judge who has emphatically rejected the administration's maximalist legal strategy.

The investigation began late last year, when Pirro's office served two subpoenas to the Fed's Board of Governors. Prosecutors sought records about recent renovations of the board's buildings and testimony that Powell delivered to Congress that briefly discussed the project, which is running over budget by about $700 million and is set to cost around $2.5 billion. The administration seized on those cost overruns and accused Powell of mismanaging the project, culminating in a visit by Trump at the construction site in July.

The criminal investigation is only the latest in a string of attacks by the White House to pressure the Fed into lowering borrowing costs. The Justice Department's investigation prompted a rare rebuke from Powell, who accused the White House of using the threat of criminal charges to coerce the central bank into lowering rates.

"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," he said in January in an extraordinary video message.

The investigation also drew condemnation from lawmakers from both political parties. Crucially, Powell got support from several Republican senators on the powerful Banking Committee, which oversees the Fed and manages anyone nominated by the president to the central bank.

Sen. Thom Tillis of North Carolina, a pivotal member of the committee, warned in January that he would block any attempt by Trump to nominate a new Fed chair, throwing a wrench into the president's plans to replace Powell with Kevin M. Warsh, a former Fed governor whom he tapped for the job in January. On Friday, Tillis said the judge's 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."

He called on Pirro's office to "save itself further embarrassment and move on," while warning that appealing the ruling would delay the confirmation of Warsh as chair.

Boasberg began his ruling in the Fed case by quoting a few of the nearly 100 statements that Trump and his aides have made attacking Powell and pressuring him to lower interest rates. The judge also noted that last July, Bill Pulte, the director of the Federal Housing Finance Agency, posted a message on social media "asking Congress to investigate Chairman Jerome Powell" over "his political bias," the board's renovations, and the chair's testimony about them.

"In sum," Boasberg wrote, "the president spent years essentially asking if no one will rid him of this troublesome Fed chair. He then suggested a specific line of investigation into him, which had been proposed by a political appointee with no role in law enforcement, who hinted that it could be a way to remove Powell."

Pirro, he went on, "promptly complied" with the suggestion to begin a criminal inquiry.

"Those facts strongly imply that this investigation was launched for an improper purpose, as were the resulting subpoenas," Boasberg concluded.

This article originally appeared in The New York Times.