A federal judge on Friday blocked the Justice Department from serving subpoenas on Federal Reserve Chairman Jerome Powell in an investigation allegedly related to his handling of the central bank’s overhaul.
Powell revealed the surprise investigation on Jan. 11, describing the move as a threat to the Fed’s 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 aimed at pressuring the Federal Reserve chairman to lower rates or resign.
“The government has presented virtually no evidence to suspect Chairman Powell of a crime; in fact, its justifications are so weak and baseless that the Court can only conclude that they are pretextual,” DC District Court Chief Judge James Boasberg wrote on Friday.
Tom Tillis, a Republican U.S. senator, said Friday that an appeal by the Trump administration in a Justice Department case involving Powell “will only delay the confirmation of Kevin Warsh as the next chairman of the Federal Reserve.”
Tillis is part of a small group of Republicans who have expressed opposition to the Justice Department investigation and have 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, whom he appointed chairman of the Federal Reserve in 2018 during his first term. Over the past year, Trump has called Powell “stupid” and “too slow” for not lowering interest rates, despite volatile market reactions to Trump’s attacks.
Last summer, Trump accused Powell of “fraud” over renovations at the Federal Reserve headquarters in Washington, DC, that went over budget. Powell denied the allegations and called the Justice Department investigation a “pretext” to pressure the Federal Reserve to lower rates.
While Warsh appears willing to help carry out Trump’s agenda to lower interest rates, Powell’s term ends in May and the president has not announced whether he will remain on the Federal Open Framework Committee (FOMC), the Federal Reserve board that sets interest rates. Although it is standard for a Fed chair to leave the board entirely after his term ends, Powell’s seat on the board technically expires in January 2028.
Meanwhile, the Supreme Court has yet to rule on a case that Federal Reserve Governor Lisa Cook brought against Trump after the president tried to fire her last summer. At a court hearing in January, the court was flatly skeptical about giving the president so much power over the Federal Reserve, given its influence over the economy.
Trump alleged that Cook committed mortgage fraud by listing multiple properties as his primary residence on mortgage applications, which would give him a better rate.
Cook has denied the allegations, and his lawyers have noted that other government officials, including U.S. Treasury Secretary Scott Bessent, have expressed the same disagreements. A Supreme Court ruling on Cook’s case is expected in June.
Reuters contributed inform
