A Justice Department investigation into a $2.5 billion renovation project at the Federal Reserve found no evidence of a crime, according to a transcript of a sealed hearing. The concession came from Assistant U.S. Attorney Andrew Massucco during questioning by a judge earlier this month.
Investigation Stalled
Chief Judge James Boasberg subsequently quashed government subpoenas issued to the Federal Reserve, a decision described as a significant setback for the government’s investigation. Boasberg, nominated by President Barack Obama, stated the government presented “essentially zero evidence” to suspect Fed Chair Jerome Powell of any wrongdoing.
During the March 3 hearing, Judge Boasberg pressed Massucco for specifics regarding potential fraud or criminal misconduct. When asked about false statements made by Powell before Congress, Massucco responded, “Well, we don’t know is my first answer.” He further stated there were “1.2 billion reasons” to investigate, referencing the project’s cost overruns.
Political Motivations Alleged
The investigation was initiated following testimony by Powell last June before the Senate Banking Committee regarding the renovation’s escalating costs. Robert Hur, an attorney representing the Federal Reserve, argued the subpoenas were part of a campaign to pressure Powell to lower interest rates, a goal repeatedly expressed by President Trump.
According to Hur, “He clearly has extremely strong political motives to try to get lower interest rates, but because of the safeguards that have been erected by Congress around the Federal Reserve’s independence when it comes to setting monetary policy, he can’t get it.”
Appeal Expected
U.S. Attorney Jeanine Pirro, who nominated Massucco, publicly criticized Judge Boasberg, calling him an “activist judge” and claiming he had hindered the grand jury’s ability to investigate. She stated her office intends to appeal the decision.
The investigation has also reportedly delayed Senate consideration of Kevin Warsh, President Trump’s nominee to replace Powell when his term ends on May 15. Powell is able to remain chair beyond that date if a replacement is not approved.
Frequently Asked Questions
What prompted the Justice Department investigation?
The investigation centered on testimony given by Fed Chair Jerome Powell last June before the Senate Banking Committee regarding cost overruns on the Federal Reserve’s building renovations.
What was Judge Boasberg’s reasoning for quashing the subpoenas?
Judge Boasberg stated the government had produced “essentially zero evidence” to suspect Fed Chair Jerome Powell of a crime and that the justification for the subpoenas was “thin and unsubstantiated.”
What is the status of Kevin Warsh’s nomination?
Senate consideration of Kevin Warsh, President Trump’s pick to replace Powell, has been delayed due to the investigation. Powell can remain as chair past May 15 if no replacement has been approved.
Given the judge’s strong rebuke and the lack of evidence presented, what impact will this investigation have on the relationship between the Justice Department and the Federal Reserve moving forward?
