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A federal judge in Washington threw a major roadblock into a criminal investigation of Jerome H. Powell, the Federal Reserve chair, quashing grand jury subpoenas issued to the central bank by federal prosecutors over renovations underway at its headquarters in Washington.
In a blistering 27-page decision unsealed on Friday, the judge, James E. Boasberg, derided the U.S. attorney’s office in Washington for pursuing a case against Mr. Powell, delivering a serious setback to President Trump in his effort to use the criminal justice system to punish political foes or pursue his agenda. Mr. Powell has long resisted calls from the White House to significantly lower borrowing costs, prompting a litany of attacks that has also included an effort by the president to fire another top official, Lisa D. Cook.
“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,” Judge Boasberg wrote.
He continued, “On the other side of the scale, the government has offered no evidence whatsoever that Powell committed any crime other than displeasing the president.”
The ruling was a reminder of the real-world limitations on authority the president has claimed to be nearly boundless. Time and again, judges and juries across the country have rejected what they appear to increasingly view as attempts by the Trump administration to replace executive fiat for traditional rule of law. In particular, Mr. Trump’s efforts to pursue criminal cases against his perceived enemies have almost uniformly floundered, with either juries declining to bring indictments or judges questioning the basis of the charges.
Judge Boasberg’s decision did not necessarily mean the official end of the inquiry led by a Trump loyalist, Jeanine Pirro, the U.S. attorney in Washington. But it has dealt a crippling, perhaps fatal, blow to an inquiry that might now delay legislative approval of the White House’s handpicked replacement for Mr. Powell while deepening divisions among Republicans.
If prosecutors intend to continue pursuing it, they would have to find other ways of obtaining evidence, like persuading a judge to issue a search warrant.
A fiery Ms. Pirro, appearing at a hastily called news conference in her office up the block from Federal District Court in Washington, where Judge Boasberg sits as the chief judge, said she planned to both appeal and file a motion requesting the judge to reconsider.
She also followed the bellicose lead of her boss, Mr. Trump, by attacking the judge, accusing him of harboring an animus toward the president and claiming that he had “neutered the grand jury’s ability” to obtain information from the Federal Reserve about its expenditures.
“Jerome Powell today is now bathed in immunity, preventing my office from investigating the Federal Reserve,” said Ms. Pirro, who asserted the subpoenas were issued because Mr. Powell ignored prior requests for information. “This is wrong, and it is without legal authority.”
The exchange was the latest development in a three-sided battle between a top Trump ally determined to pursue a dubious legal course to placate the president, a Fed chair fighting for the independence of an institution whose stewardship is essential to the economy, and a judge who has emphatically rejected the administration’s maximalist legal strategy.
The investigation began late last year, when Ms. Pirro’s office served two subpoenas to the Fed’s Board of Governors. Prosecutors sought records about recent renovations of the board’s buildings and testimony that Mr. Powell delivered to Congress that briefly discussed the project, which is running over budget by about $700 million and is set to cost around $2.5 billion. The administration seized on those cost overruns and accused Mr. Powell of mismanaging the project, culminating in a visit by Mr. Trump at the construction site in July.
The criminal investigation is only the latest in a string of attacks by the White House to pressure the Fed into lowering borrowing costs. The Justice Department’s investigation prompted a rare rebuke from Mr. Powell, who accused the White House of using the threat of criminal charges to coerce the central bank into lowering rates.
“This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions — or whether instead monetary policy will be directed by political pressure or intimidation,” he said in January in an extraordinary video message.
The investigation also drew condemnation from lawmakers from both political parties. Crucially, several Republican senators on the powerful Banking Committee, which oversees the Fed and manages anyone nominated by the president to the central bank, voiced their support for Mr. Powell.
Senator Thom Tillis of North Carolina, a pivotal member of the committee, warned in January that he would block any attempt by Mr. Trump to nominate a new Fed chair, throwing a wrench into the president’s plans to replace Mr. Powell with Kevin M. Warsh, a former governor he tapped for the job. On Friday, Mr. Tillis said the judge’s ruling “confirms just how weak and frivolous the criminal investigation of Chairman Powell is, and it is nothing more than a failed attack on Fed independence.”
He called on Ms. Pirro’s office to “save itself further embarrassment and move on,” while warning that appealing the ruling would delay the confirmation of Mr. Warsh as chair.
Judge Boasberg’s ruling was merely the latest embarrassing failure by the Justice Department to use the criminal justice system to go after people Mr. Trump has perceived to be his enemies.
In Ms. Pirro’s office alone, a pair of prosecutors working for her tried and failed last month to secure an indictment against six Democratic lawmakers who posted a video in the fall that enraged Mr. Trump by reminding active-duty members of the military and intelligence community that they were obligated to refuse illegal orders.
Around the same time, prosecutors in the office shelved their efforts to investigate whether former President Joseph R. Biden Jr. and his aides had broken the law by using the autopen to sign presidential documents, despite intense pressure from Mr. Trump to build a case.
In the Eastern District of Virginia, a judge dismissed the criminal cases brought against the former F.B.I. director James Comey and New York’s attorney general, Letitia James, saying the prosecutor who had brought them had been illegally appointed.
Prosecutors sought to continue pursuing the case against Ms. James, bringing charges to two separate grand juries, one in Norfolk, Va., and another in Alexandria, Va., in two weeks, only to be rejected twice.
In his ruling in the Fed case, Judge Boasberg began by quoting a few of the nearly 100 statements that Mr. Trump and his aides have made attacking Mr. Powell and pressuring him to lower interest rates. The judge also noted that last July, Bill Pulte, the director of the Federal Housing Finance Agency, posted a message on social media “asking Congress to investigate Chairman Jerome Powell” over “his political bias,” the board’s renovations and the chairman’s testimony about them.
“In sum,” Judge Boasberg wrote, “the president spent years essentially asking if no one will rid him of this troublesome Fed chair. He then suggested a specific line of investigation into him, which had been proposed by a political appointee with no role in law enforcement, who hinted that it could be a way to remove Powell.”
Ms. Pirro, he went on, “promptly complied” with the suggestion to begin a criminal inquiry.
“Those facts strongly imply that this investigation was launched for an improper purpose, as were the resulting subpoenas,” Judge Boasberg concluded.
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“The government has offered no evidence whatsoever that Jerome H. Powell, the Federal Reserve chair, committed any crime other than displeasing the president,” Judge James E. Boasberg wrote. Credit…Caroline Gutman for The New York Times
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