The Federal Reserve is privately challenging two subpoenas issued in U.S. Attorney Jeanine Pirro‘s criminal investigation into Chair Jerome Powell.
The Fed is seeking a judge’s dismissal of the subpoenas in sealed proceedings, which could potentially reduce or eliminate its obligation to respond, The Wall Street Journal reported on Thursday.
The Federal Reserve has not disclosed the specific legal grounds it is asserting in the case. However, it is common in high-profile matters for parties to challenge subpoenas as overly broad or as seeking information protected by legal privilege.
This legal battle is happening behind closed doors due to secrecy rules applicable to criminal investigations pending before a grand jury.
The Federal Reserve did not immediately respond to Benzinga‘s request for comment.
Renovation Probe Fuels Tensions
This legal challenge comes amid escalating tensions between the Federal Reserve and the Trump administration. In January, Jerome Powell revealed that the Department of Justice had threatened the central bank, in early January, with a “criminal indictment” over his congressional testimony regarding the bank’s renovation costs and issued subpoenas.
The probe, opened in November, has been defended by Pirro, who said subpoenas were issued after the Fed failed to respond to multiple information requests, including December emails seeking a meeting. The subpoenas called for the Fed to issue a response by the end of January.
In another twist, the Financial Times uncovered a July letter to senators, wherein Powell outlined extensive details about the renovation project, contradicting claims that he misled Congress.
Warsh Nomination At Risk
The probe was a significant escalation in the ongoing conflict between President Donald Trump and the central bank, following months of relentless attacks for not aggressively cutting rates and repeated calls for Powell’s removal.
Further intensifying the situation, Trump, in February, expressed his desire for the federal investigation into Powell to continue, dismissing warnings that the probe threatens the independence of the central bank.
The standoff between Trump and Powell threatens to delay confirmation of the president’s nominee, Kevin Warsh, as the next Federal Reserve chair. Sen. Thom Tillis (R-NC) has said he won’t advance any Fed nominee until the Justice Department probe concludes, and with all Democrats opposing, the GOP lacks enough votes on the Senate Banking Committee to move the nomination forward without him.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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