A significant court decision has been reached in the investigation into the Federal Reserve and its chairman, Jerome Powell, in the United States. A federal court in Washington definitively rejected the Justice Department’s attempt to reinstate grand jury subpoenas against the Fed.
U.S. District Judge James Boasberg stated in his ruling today that the government’s justifications for reconsidering the previous decision were “far from convincing.” The court had previously dismissed two subpoenas sent to the Federal Reserve’s board of governors, requesting documents related to a nearly $2.5 billion headquarters renovation project.
In his ruling, Boasberg stated that there was “ample evidence” that the subpoenas were intended to pressure Powell rather than pursue a legitimate criminal investigation. The judge added, “Powers based on subpoenas are not unlimited and cannot be abused.”
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The Justice Department’s investigation was launched after Powell’s testimony before the Senate Banking Committee, in which he highlighted the need for renovations to the Marriner S. Eccles Building and other Federal Reserve buildings. Initially projected at $1.9 billion, the project cost rose to $2.5 billion due to design changes and increased expenses.
Jeanine Pirro, the District of Columbia Attorney, strongly criticized the court’s decision, accusing the judge of being an “activist” and arguing that the ruling weakened the grand jury’s capacity to investigate the Fed.
In his ruling, Boasberg stated that the fundamental legal question was the “real purpose” of the subpoenas: Was it based on genuine suspicion of a crime, or was it to force Powell to lower interest rates or resign? The court stated that the government failed to provide sufficient good faith grounds for suspicion of a crime.
This development is seen as a new reflection of the long-standing tension between the Donald Trump administration and the Fed in the US. Trump has been openly criticizing Powell for months for not lowering interest rates.
*This is not investment advice.