The Federal Reserve has been mounting a closed-door effort to block the U.S. Justice Department’s subpoenas for outgoing Chairman Jerome Powell.
The Wall Street Journal was first to report the Fed’s move to quash the subpoenas.
Powell revealed in January that the central bank had received grand jury subpoenas from the Justice Department as part of an ongoing criminal investigation into him.
According to Powell, the subpoenas threatened a criminal indictment related to his testimony before the Senate Banking Committee in June 2025.
Powell has drawn President Donald Trump’s ire for declining to rapidly cut interest rates and said the probe centered on his comments about a years-long renovation project at the Federal Reserve’s office buildings.
CBS noted that the investigation has not resulted in any criminal charges.
Sealed Court Proceedings
CBS stated that in sealed court proceedings, the Fed is challenging the legality of the subpoenas and is asking a federal judge to quash them, citing a source familiar with the efforts. CBS said it is unclear what the Federal Reserve’s legal arguments are, and said the challenge is taking place behind closed doors because of secrecy rules surrounding grand jury proceedings.
The independently funded Fed renovation project and Powell’s testimony came under scrutiny by the administration last year, CBS noted, with Office of Management and Budget Chair Russell Vought accusing Powell of leading an “ostentatious” renovation project, which has faced cost overruns, that may be “violating the law.”
In his testimony to the Senate, Powell said some descriptions of the renovation project as overly lavish were misleading and inaccurate.” He said there isn’t any new marble aside from what’s necessary to replace broken old marble and that there are no “special elevators,” new water features, or rooftop gardens.
The Fed and the president have been in conflict for months.
The president has pressed the Fed to quickly lower interest rates in order to boost economic growth and lower borrowing costs, but the central bank has taken a more cautious approach, wary of causing inflation to spike.
Powell’s term as Fed chair is set to end in May.
Powell Could Stay on Fed Board Until 2028
He is eligible to remain on the Fed board until 2028, where he could continue to play a role in monetary policy, but he hasn’t indicated whether he will stay, CBS said.
Last month, Powell said that the criminal investigation was a pretext to put pressure on the Fed and challenge its ability to set monetary policy independently.
“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president,” Powell said at the time.
In January, U.S. Attorney for D.C. Jeanine Pirro said Powell’s announcement regarding the subpoenas that her office’s staff “contacted the Federal Reserve on multiple occasions to discuss cost overruns and the chairman’s congressional testimony, but were ignored, necessitating the use of legal process, which is not a threat.”
“The word ‘indictment’ has come out of Mr. Powell’s mouth, no one else’s,” Pirro said. “None of this would have happened if they had just responded to our outreach.”
