Judge Blocks DOJ Probe of Federal Reserve, Citing Political Pressure

A federal judge halted a Justice Department criminal probe of the Federal Reserve Friday, determining that the investigation was an improper attempt by the Trump administration to pressure the central bank into cutting interest rates. Judge James Boasberg quashed subpoenas issued to the Fed in January, which ostensibly sought information about cost overruns on the renovation of the Fed's headquarters.

Boasberg wrote that the government has offered no evidence that Fed Chair Jerome Powell committed any crime other than displeasing the President. He added there is abundant evidence that the subpoenas' dominant purpose is to harass and pressure Powell to yield to the President or resign. The judge quoted some of the attacks President Trump and his aides have leveled at Powell for failing to make deeper cuts in interest rates. Judge Boasberg of the DC district court wrote that the government has produced essentially zero evidence to suspect Chair Powell of a crime.

The Justice Department's investigation was purportedly about the management of the central bank's $2.5 billion renovation project. Powell disclosed the investigation on January 11, describing the move as a threat to Fed independence and part of the Trump administration’s attempts to pressure the Fed to cut rates.

Sen. Thom Tillis, a Republican from North Carolina, praised the decision, calling the criminal investigation of Chairman Powell a weak and frivolous attack on Fed independence. Tillis added that the D.C. U.S. Attorney's Office should save itself further embarrassment and move on. U.S. Attorney Jeanine Pirro promised an appeal and labeled Boasberg an "activist judge." Pirro said that Boasberg has neutered the grand jury's ability to investigate crime and that Jerome Powell is now bathed in immunity.

Tillis, who sits on the Senate Banking Committee, has threatened to block any vote on Trump's nominee, Kevin Warsh, to succeed Powell until the Justice Department probe is dismissed. Tillis stated that appealing the ruling will only delay the confirmation of Kevin Warsh as the next Fed Chair.

Powell's term as Fed chairman expires in May. 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. 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. A supreme court ruling on Cook’s case is expected by June.

The U.S. Attorney's Office for the District of Columbia said they would appeal the decision, potentially prolonging uncertainty around the Fed's leadership.