Judge says ‘no evidence’ to justify Federal Reserve probe

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Natalie ShermanBusiness reporter

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A US judge has blocked efforts by the Department of Justice to investigate the Federal Reserve, delivering a victory for Fed chairman Jerome Powell, who had called the probe a pretext to try to pressure the central bank to lower interest rates.

In his ruling, Judge James Boasberg agreed, saying prosecutor Jeanine Pirro had presented “no evidence” to justify her demands for information from the Fed.

Pirro said she would appeal against the decision, saying it was “wrong on its face” and had “neutered” her ability to investigate crime.

The case has sparked concerns about political pressure on the central bank and has complicated White House efforts to install a new Fed chair.

The Federal Reserve declined to comment on Judge Boasberg’s ruling.

However, at a fiery press conference, Pirro dismissed questions about whether her pursuit of the matter would delay plans to replace Powell as chairman when his term ends in May, calling the issue “white noise”.

She criticised the decision to toss out the subpoenas filed by her office, which sought to compel the central bank to produce information about cost overruns at renovations of its offices. She said the decision was “outrageous”, noting that prosecutors typically do not have to produce evidence at this stage.

“This process has been arbitrarily undermined by an activist judge,” she said. “Jerome Powell today is now bathed in immunity.”

Pirro, an ally of Donald Trump, was appointed by the president last year as US attorney for the District of Columbia. She issued the subpoenas in January, after inquiries from her office about the renovation and about Powell’s testimony before Congress on the subject, were ignored.

The move prompted an unusually outspoken response from Powell, who put out a video accusing the Trump administration of launching the legal probe to pressure the bank into cutting interest rates.

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In his ruling, Boasberg said he had been convinced that the Justice Department subpoenas had been issued for the “improper purpose” of convincing Powell to comply with Trump’s demands for lower interest rates.

“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,” he wrote.

“On the other side of the scale, 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.”

He noted statements by key Republican senators in Congress, which held a hearing on the overruns, who have said they do not think further investigation is warranted.

Senator Thom Tillis of North Carolina has vowed to block the appointment of a new chairman unless the investigation is resolved.

In a statement on social media on Friday, he said appealing the decision would only delay the confirmation of Kevin Warsh, whom Trump named in January as his pick to replace Powell.

“We all know how this is going to end and the DC US Attorney’s Office should save itself further embarrassment and move on,” he said. He added that the decision confirmed “just how weak and frivolous the criminal investigation” is, calling it “nothing more than a failed attack on Fed independence”.

At the press conference, Pirro brushed off concerns about the impact of her move on the nomination.

“I don’t know and I don’t care,” she said. “I am in a legal lane.”

US Federal Reserve

Donald Trump

United States