A US judge has blocked subpoenas issued by Donald Trump’s Department of Justice to the Federal Reserve, in a major blow to prosecutors’ criminal investigation into chair Jay Powell and a victory for the central bank.
James Boasberg, a US federal judge in the District of Columbia, wrote in an opinion unsealed on Friday that prosecutors were using their probe into renovations of the Fed’s headquarters to force Powell to “knuckle under” and bend to Trump’s relentless calls to slash borrowing costs.
“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.
The judge said the Trump administration had “produced essentially zero evidence” to suspect Powell of a crime, adding: “Its justifications are so thin and unsubstantiated that the court can only conclude that they are pretextual.”
Boasberg’s ruling will stymie the criminal investigation into Powell related to cost overruns on the Fed’s $2.5bn headquarters renovation project.
Global central bankers and lawmakers, including some members of Trump’s Republican Party, have expressed grave concern over the investigation, which they view as an unprecedented attempt at eroding the independence of the world’s most important central bank.
Powell in January called the move an “unprecedented action” from the DoJ, saying it was an attempt to rein in the Fed’s independence.
Trump has relentlessly criticised Powell of being a “moron” and a “stubborn mule” for declining to sharply reduce rates. Trump has also sought to sack Fed governor Lisa Cook, in a move that was blocked by a lower court judge and later argued before the US Supreme Court, which is expected to rule in the coming months.
The president has denied any involvement in the DoJ probe, and the White House did not respond to a request for comment on Friday. The Fed declined to comment.
In a fiery press conference shortly after the opinion was published, Jeanine Pirro, US attorney for the District of Columbia, tore into Boasberg, who she described as an “activist judge”. Pirro vowed to appeal against the ruling, which she said had “neutered the grand jury’s ability to investigate crime.”
“Jerome Powell today is now bathed in immunity, preventing my office from investigating the Federal Reserve,” Pirro said. “That is wrong, and it is without legal authority.”
The DoJ investigation, which was launched in January, has already had far-reaching consequences for Trump, prompting Republican Senator Thom Tillis of North Carolina to hold up the process to confirm Powell’s successor. Tillis has said he will block any Trump appointee to the Fed until the DoJ probe into Powell is “resolved”.
Trump in late January nominated former Fed governor Kevin Warsh to succeed Powell as chair when his term ends in May. Warsh needs to be confirmed by the Senate in order to take up his post.
Tillis on Friday said Boasberg’s ruling confirmed “just how weak and frivolous” the criminal investigation into Powell was, adding: “It is nothing more than a failed attack on Fed independence.
“We all know how this is going to end,” Tillis said, adding Pirro’s office should “save itself further embarrassment and move on”.