Judge Quashes DOJ Subpoenas in Federal Reserve Probe, Powell Gains Victory

A federal judge on Friday quashed two subpoenas issued by the Justice Department to the Federal Reserve, delivering a significant win to the Fed and its Chair Jerome Powell. The decision effectively undermines the criminal investigation into whether Powell misled Congress regarding cost overruns in a renovation project at the Fed’s Washington headquarters.

DOJ Investigation and Allegations

The Justice Department, under D.C. District Attorney Jeanine Pirro, initiated a criminal inquiry in January 2026, focusing on allegations that Powell made false statements to Congress during testimony in the summer of 2025. The testimony concerned cost overruns related to the renovation of the Federal Reserve’s headquarters.

Powell publicly refuted the investigation, asserting it was politically motivated and stemmed from disagreements between the Trump administration and the Federal Reserve regarding interest rate policy. President Trump had repeatedly called for lower interest rates.

Judge Boasberg’s Ruling

U.S. District Judge James Boasberg issued a sharply worded order quashing the subpoenas. He found a “mountain of evidence” suggesting the government intended to pressure Powell into lowering interest rates or resigning. Conversely, the judge stated the government presented “essentially zero evidence” to suspect Powell of any crime.

Boasberg likewise echoed concerns that the criminal case threatened the independence of the Federal Reserve and its ability to set monetary policy without political interference. He suggested the renovation and related testimony were a “convenient pretext” for a politically driven investigation. The judge cited multiple posts on Truth Social by former President Trump criticizing the Fed and Powell for not lowering rates.

The judge concluded that the government likely targeted Powell “out of malice or an intent to harass” and engaged in a “fishing expedition” to locate grounds for charges or force his resignation, potentially “bulldozing the Fed’s statutory independence.”

Reactions and Next Steps

Following the ruling, D.C. District Attorney Jeanine Pirro criticized Judge Boasberg as an “activist judge” and accused him of hindering the investigation. She stated her office would appeal the decision.

The Federal Reserve is currently at a critical juncture, with Jerome Powell’s term as chair ending in May. Kevin Warsh, nominated by former President Trump to replace him, has been awaiting confirmation, a process stalled by the criminal probe.

Senator Tim Scott (R-SC), chair of the Senate Banking Committee, has expressed a desire to hold a confirmation hearing for Warsh as soon as possible. Yet, Senator Thom Tillis (R-NC) has vowed to delay the process until the probe is officially dropped. Tillis stated the ruling confirms the weakness of the investigation and represents a failed attack on the Fed’s independence.