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The Federal Reserve remains in a standoff with a federal prosecutor demanding information related to the renovations of two historic buildings at the central bank’s headquarters in Washington.
Behinds-the-scenes tussling over grand jury subpoenas sent to the Fed by the U.S. attorney for the District of Columbia, Jeanine Pirro, in January has now continued into a second month, said a person familiar with the matter, who asked not to be identified due to the sensitivity of the situation. The wrangling over the information signals the unlikeliness of a quick resolution to the probe.
Fed Chairman Jerome Powell has said the inquiry relates to his June congressional testimony on the renovations. However, he has said it is really intended to pressure policymakers who refused to set interest rates according to the preferences of President Donald Trump.
Beyond interest rates, the probe is laced with major political — and potentially economic — implications. When Powell said that the Fed had been served with the subpoenas on a Sunday evening in January, stock futures and the dollar weakened. The standoff has also complicated Trump’s ability to install his pick to replace Powell, whose term as chair ends in May.
Senate confirmation
Trump said last month that he had selected former Fed Governor Kevin Warsh for the role, but Republican Thom Tillis, a member of the Senate Banking Committee, has vowed to hold up any Fed nominee until the Justice Department probe is fully resolved. Without Tillis’ support on the committee, Warsh’s nomination would face significant hurdles to advance to the full Senate for confirmation.
The Wall Street Journal reported on Thursday that the Fed, in sealed proceedings, has asked a judge to quash the subpoenas.
The Fed and the U.S. attorney’s office declined to comment.
Frequent targets
Powell and the Fed have been frequent targets of Trump, who has criticized them for not lowering interest rates quickly enough.
Trump has pressured the central bank on several fronts beyond the renovation project, including an unprecedented attempt to fire Fed Governor Lisa Cook.
Pirro said in a Jan. 12 post on X that her office contacted the Federal Reserve multiple times to discuss cost overruns and Powell’s testimony “but were ignored, necessitating the use of legal process —which is not a threat.”
“This office makes decisions based on the merits, nothing more and nothing less. 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,” Pirro said.
The Fed received two emails from Pirro’s office at the end of last year, just before Christmas and another before New Year’s Day, a person familiar with the situation told Bloomberg News in January. The emails did not mention any deadlines for response or a criminal investigation, said the person, who also asked not to be identified because of the sensitivity of the situation.
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