Court Weighs Quashing Doj Subpoenas On Fed's Headquarter Renovations

The federal district court in Washington held a closed-door hearing this week to consider quashing or narrowing subpoenas sent to the Federal Reserve by the Justice Department, according to a person briefed on the development, the latest chapter in a probe that is central to a fight over the Fed’s future.

Grand jury disputes are typically resolved by the court’s chief judge, in this case James Boasberg, and are usually handled quickly by the court. The timing of any resolution will help drive the pace of confirmation for Kevin Warsh, whom President Donald Trump has selected to head the central bank when Chair Jerome Powell’s term ends in May.

Warsh’s candidacy has been delayed over concerns by Sen. Thom Tillis (R-N.C.) about the DOJ’s investigation, which spilled into public view in January when it was disclosed by Powell in an unprecedented video message. The Fed chair argued that the move was motivated by Trump’s desire for lower interest rates, and Tillis has similarly suggested that he is worried that the probe is an attempt to undermine the political autonomy of the central bank.

Until the DOJ concludes its investigation, Tillis has said he will not vote to advance any Fed nominees.

The extent of the information being sought by the DOJ is unclear, but Powell said the subpoenas related to his statements to Congress regarding renovations of the Fed’s headquarters in Washington. Multiple Republican senators, including Banking Chair Tim Scott, have said they do not believe Powell committed a crime during his testimony last year.

The closed-door court hearing suggests the central bank may be resisting the subpoenas behind the scenes, in line with earlier reporting by The Wall Street Journal.

The Fed declined to comment.

Spokespeople for U.S. Attorney for D.C. Jeanine Pirro, whose office is leading the investigation, did not immediately respond to a request for comment. Pirro indicated last month that the grand jury subpoenas were issued because the Fed ignored informal requests from prosecutors.

“None of this would have happened if they had just responded to our outreach,” Pirro said then. “We agree with the chairman of the Federal Reserve that no one is above the law, and that is why we expect his full cooperation.”