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A federal judge on Friday quashed Justice Department subpoenas issued to the Federal Reserve\u00a0in January, a severe blow to an investigation that has already attracted strong criticism on Capitol Hill.<\/p>\n
The investigation into testimony last June by Chair Jerome Powell about a $2.5 billion building renovation has also delayed Senate consideration of\u00a0Kevin Warsh, President Donald Trump\u2019s pick to replace Powell when his term ends May 15.<\/p>\n
Judge James Boasberg said that the government has \u201cproduced essentially zero evidence to suspect Chair Powell of a crime\u201d and called its justifications for the subpoenas so \u201cthin and unsubstantiated\u201d that they were simply a pretext to force Powell to cut interest rates, as Trump has repeatedly demanded.<\/p>\n
\u201cThere is abundant evidence that the subpoenas\u2019 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,\u201d he wrote.<\/p>\n
The unprecedented investigation into Powell and the Fed is the latest in a series of moves by the Trump administration pressure the central bank, which has for decades been considered as independent from day-to-day politics. Trump has also sought to\u00a0fire Lisa Cook, a member of the Fed\u2019s governing board, after a member of his administration accused her of mortgage fraud, though no charges were ever filed. The Supreme Court has blocked Cook\u2019s firing for now.<\/p>\n
Boasberg\u2019s ruling blocks U.S. Attorney Jeanine Pirro, who issued the subpoenas, from obtaining records from the Fed related to the building renovation. Pirro blasted the ruling at a news conference and said she would appeal it.<\/p>\n
Pirro said an \u201cactivist judge\u201d has quashed the subpoenas, and has \u201cneutered the grand jury\u2019s ability to investigate crime\u201c and leaves Powell \u201cbathed in immunity.\u201d<\/p>\n
\u201cThis is wrong and it is without legal authority,\u201d she said.<\/p>\n
The Justice Department\u2019s investigation centers on testimony last June by Powell before the Senate Banking Committee, when he was asked about cost overruns on the Fed\u2019s extensive building renovations. The most recent estimates from the Fed suggest the current estimated cost of $2.5 billion is about $600 million higher than a 2022 estimate of $1.9 billion.<\/p>\n
Powell at the time disputed that the renovation included \u201crooftop gardens \u2026 VIP elevators\u201d and other amenities. But administration officials charged that earlier construction plans included some of those features, suggesting Powell was either lying or hadn\u2019t filed updated building plans.<\/p>\n
Pirro, in her news conference, said she wanted to investigate \u201can atrocious cost overrun of $1 billion.\u201d In a filing unsealed Friday, the government said it was investigating \u201cpossible fraud and false statements\u201d by the Fed and Powell.<\/p>\n
Pirro\u2019s plan to appeal and continue the investigation could further delay the Senate\u2019s consideration of Warsh\u2019s nomination. Powell can remain as Chair past May 15 if no replacement has been approved.<\/p>\n
Powell revealed the investigation in an unprecedented video Jan. 11, which prompted Senator Thom Tillis, a North Carolina Republican and member of the Banking committee, to block consideration of Warsh until the investigation is dropped.<\/p>\n
Tillis said the ruling confirmed \u201cjust how weak and frivolous the criminal investigation of Chairman Powell is.\u201d Tillis has vowed to blockade all Federal Reserve nominees until the criminal probe into Powell is dropped.<\/p>\n
\u201cWe all know how this is going to end and the D.C. U.S. Attorney\u2019s Office should save itself further embarrassment and move on,\u201d Tillis said Friday. \u201cAppealing the ruling will only delay the confirmation of Kevin Warsh as the next Fed Chair.\u201d<\/p>\n
Tillis has also said that seven Republican members of the banking committee have said no crime was committed by Powell at the June hearing.<\/p>\n
On Tuesday, Tillis met with Warsh and said he \u201cpossesses impeccable credentials and a clear vision for maintaining the Fed\u2019s independence while achieving its dual mandate,\u201d which is to seek low inflation and maximum employment. But he reiterated he couldn\u2019t support Warsh until the investigation is completed.<\/p>\n
With Republicans holding only a 13-11 majority on the committee, Tillis can block Warsh\u2019s nomination from being forwarded to the Senate if all Democrats vote against it.<\/p>\n
In his ruling, Boasberg said he offered to let the government submit further evidence against Powell directly to him, so that they wouldn\u2019t have to tip their hand to the Fed or Powell. But the government declined to submit evidence under those conditions.<\/p>\n
\u201cThe Court is thus left with no credible reason to think that the Government is investigating suspicious facts as opposed to targeting a disfavored official,\u201d the judge wrote in his ruling.<\/p>\n
In one of the filings unsealed Friday, there was a tantalizing reference to a key question that has surrounded Powell for months, which is whether he will step down from the governing board when his term as Chair ends. It was included in a government filing in response to the Fed\u2019s move to throw out the subpoenas.<\/p>\n
Powell is serving a separate term as a Fed governor until January 2028. Most chairs resign from the board when their time as chair ends, but Powell has refused to answer if he will do so. Remaining on the board would enable Powell to deny Trump the opportunity to appoint a new governor.<\/p>\n
In recounting a meeting between a lawyer for the Fed and Pirro, the filing says that the Fed\u2019s attorney indicated that: \u201cThe Chair feels like he would not leave the board when his term as Chair expires, if he was still under investigation.\u201d<\/p>\n
The filing went on to say that Powell wouldn\u2019t commit to leave the board if he was not under investigation, but added that, \u201cit 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.\u201d<\/p>\n
Boasberg, who was nominated to the bench by Democratic President Barack Obama, has been at odds with the White House on other legal fronts since Trump returned to office last January. The Justice Department sought Boasberg\u2019s removal from a high-profile case in Washington after he barred the Trump administration from carrying out a wave of deportation flights under\u00a0wartime authorities from an 18th-century law.<\/p>\n
#Judge #quashes #Fed #subpoenas #DOJ #produced #essentially #evidence #Powell<\/p>\n","protected":false},"excerpt":{"rendered":"
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