Fed probe and Warsh hearing
- The DOJ plans to continue its investigation into the Federal Reserve and will appeal a judge's order blocking subpoenas for Jerome Powell. - Senate leaders urged wrapping up the probe as Kevin Warsh used his confirmation hearing to push back on political-deference concerns. - The developments intensified political scrutiny around the Fed, while markets interpreted Warsh's testimony as consistent with an extended hold on rates (cnbc.com) (nytimes.com).
The Justice Department is moving ahead with its case against Jerome Powell even after a judge blocked subpoenas, extending the fight over who controls the Federal Reserve. (cnbc.com) Chief U.S. District Judge James Boasberg on April 3 refused to revive subpoenas issued in January to the Fed’s Board of Governors in a criminal investigation of Powell. Jeanine Pirro, the interim U.S. attorney in Washington, said she would appeal, and CNBC reported Justice Department leaders backed that move. (cnbc.com) The subpoenas sought records tied to cost overruns at the Fed’s headquarters renovation and Powell’s testimony to Congress about the project. Boasberg wrote in March that the government had produced “essentially zero evidence” of a crime and said the subpoenas appeared aimed at pressuring Powell over interest rates. (abcnews.go.com) That court fight is colliding with Kevin Warsh’s nomination to replace Powell as Fed chair. The Senate Banking Committee held Warsh’s confirmation hearing on April 21, and Republican Sen. Thom Tillis has said he will keep blocking the nomination while the Powell probe continues. (banking.senate.gov) (cnbc.com) At the hearing, Democrats pressed Warsh on whether he would follow President Donald Trump’s public demands for lower rates. Warsh said the Fed would be “strictly independent” on monetary policy and said Trump had never asked him to promise rate cuts in exchange for the job. (cbsnews.com) (nytimes.com) Warsh also tried to separate himself from the White House without breaking with Trump’s critique of the central bank. CNBC reported he gave a qualified defense of Fed independence and repeated his call for “regime change” at an institution he says has lost credibility. (cnbc.com 1) (cnbc.com 2) Markets heard a different signal than the White House’s demand for immediate cuts. Reuters said Warsh did not endorse Trump’s view that rates are too high, and outside analysts said his testimony pointed more to a longer hold than a rush to ease. (usnews.com) (cfr.org) Powell has said the investigation is political retaliation for resisting pressure to slash rates, while Pirro has called Boasberg an “activist” judge and argued prosecutors should be allowed to keep digging. The appeal now keeps both fights alive at once: the legal case over Powell and the confirmation case over the man picked to replace him. (abcnews.go.com) (cnbc.com)
