Judge blocks subpoenas against Fed Chair Powell; DOJ to appeal

By Andrew Goudsward and Ann Saphir

March 13 (Reuters) - A federal judge on Friday blocked subpoenas issued by the U.S. Justice Department as part of its criminal investigation into Federal Reserve Chair Jerome Powell's handling of renovations of the central bank's Washington headquarters.

U.S. Attorney for the District of Columbia Jeanine Pirro, an appointee of Republican President Donald Trump whose office is spearheading the investigation, promised to appeal Chief U.S. District Judge James Boasberg's decision.

Powell, a frequent target of Trump's ire, disclosed the investigation on January 11, calling it a threat to the Fed's political independence.

The Fed's Board of Governors made a motion to quash the subpoenas, which sought information about the renovations of two historic buildings that have led to cost overruns as well as Powell's July 2025 testimony before the Senate Banking Committee.

Powell has called the probe a pretext for Trump to pressure the Fed into cutting interest rates. The judge agreed, saying a "mountain of evidence" suggests the investigation was to pressure the Fed chair to lower rates or resign.

"The Government has produced essentially zero evidence to suspect Chair Powell of a crime; indeed, its justifications are so thin and unsubstantiated that the Court can only conclude that they are pretextual," Boasberg wrote.

The ruling for now will make it difficult for the Justice Department to proceed in its investigation of Powell. Prosecutors said they are examining whether Powell made false statements to Congress and committed fraud, according to court documents made public on Friday.

Boasberg concluded the subpoenas were issued for an improper purpose and as a result were not legally valid.

"The Government has offered no evidence whatsoever that Powell committed any crime other than displeasing the President," the judge wrote.

"The Government might as well investigate him for mail fraud because someone once saw him send a letter," Boasberg wrote.

Pirro told a news conference that the judge "has neutered the grand jury's ability to investigate crime."

"As a result, Jerome Powell today is now bathed in immunity," Pirro told reporters, adding that her suspicion that a law was violated is enough reason to pursue cases.

A Fed spokesperson declined to comment.

Friday's developments mean Trump's nomination of former Fed governor Kevin Warsh to succeed Powell as Fed chair remains in limbo. Powell's leadership term is up in mid-May.

Republican Senator Thom Tillis has vowed to use his spot on the Senate Banking Committee to block any Fed nominee while the investigation stays open, effectively freezing the Warsh confirmation process.

Tillis on Friday said a Justice Department appeal of the ruling "will only delay the confirmation of Kevin Warsh as the next Fed Chair."

Boasberg made a reference to a famous incident in medieval England in his decision.

"The President spent years essentially asking if no one will rid him of this troublesome Fed Chair," the judge wrote in an allusion to English King Henry II's famous complaint about Thomas Becket, the country's top religious figure, which led to Becket's assassination in 1170.

Trump has heaped pressure on the central bank to cut interest rates and has lashed out at Powell for not doing so more quickly.

Trump last August also sought to fire Federal Reserve Governor Lisa Cook, citing unproven mortgage fraud allegations - which she has denied - as justification to oust her. It was the first such move by a president to try to dismiss a Fed governor since the central bank was created in 1913. Cook also has called the mortgage fraud allegations a pretext by Trump to fire her for monetary policy differences.

U.S. Supreme Court justices signaled skepticism on January 21 toward Trump's bid to fire Cook. The court has not yet ruled on the matter.

Friday's ruling was the latest court setback for the Trump Justice Department as it pursues investigations into critics and antagonists of the president. A judge in November dismissed indictments against former FBI chief James Comey and New York state Attorney General Letitia James, who each previously led investigations into Trump.

Boasberg in his ruling wrote that being an adversary to Trump "has become risky in recent years."