Pirro changes course in Fed investigation, unlikely to satisfy Powell

U.S. Attorney for the District of Columbia Jeanine Pirro on Monday asked a federal judge to vacate his decisions blocking aspects of her criminal investigation into the Federal Reserve under Chair Jerome Powell.

Pirro’s motion effectively walks back an often-repeated plan to appeal the judge’s rulings to a higher court. That ends, for the time being, the threat that Powell could be forced to turn over evidence to Pirro. Still, it is unlikely to provide the Fed chair the certainty he wants that the legal threat against him and the central bank have dissipated. Pirro continues to say she wants the proceedings to go forward, although she hasn’t presented any evidence of criminal wrongdoing since opening the investigation in November.

Powell’s term as chair expires May 15, but he said last week he will remain on the Fed’s board until the legal threat to the Fed is “well and truly over, with transparency and finality.”

Pirro has been investigating cost overruns in the Fed’s ongoing building renovations and related testimony to Congress by Powell. Chief Judge James Boasberg of the District of Columbia in March quashed Pirro’s subpoenas to the Fed saying she hadn’t provided evidence of wrongdoing sufficient to counter the appearance that President Donald Trump wanted to put political pressure on Powell to cut interest rates. He upheld that ruling in April.

Pirro had argued the judge’s decision made it difficult for her to conduct grand jury investigations in general. Her appeal was due by Monday.

“We continue to litigate Judge Boasberg’s illegal quashing of our subpoenas in order that it no longer stand and to prevent it from spawning any legal consequences,” Pirro said in a statement to CNBC.

The Fed declined to comment.

“A motion to vacate is essentially asking the judge to just pretend something never happened,” former Assistant U.S. Attorney Sean P. Murphy said.

Pirro recently filed such a motion to vacate the convictions of members of the Proud Boys and Oath Keepers in cases related to the events of Jan. 6, 2020. That motion would erase the convictions of the people involved.

“The key difference is that I don’t think she has standing to just erase the record of a DOJ loss like that” in the Fed investigation, Murphy said.

Boasberg has yet to rule on Pirro’s latest request.

He ruled against Pirro in March because her office presented no specific evidence of wrongdoing, while there were substantial signs that the investigation was intended to harass Powell over his defiance of President Donald Trump’s demands that the Fed chief rapidly cut interest rates.

“A mountain of evidence suggests that the government served these subpoenas on the board to pressure its chair into voting for lower interest rates or resigning,” Boasberg wrote.

Appeals normally require approval from a top Department of Justice official because they can create precedents that work against the DOJ. It wasn’t clear if Pirro ever got that sign-off.

The possibility of an appeal has been a contentious issue for the Fed because it runs counter to Pirro’s assertion that she has dropped her case. Powell on Wednesday said he would remain on the Fed’s board after his term as chair expired until he was convinced the legal threat to the Fed was resolved.

Pirro has said she will reopen the investigation if she believes it is warranted and is awaiting a report by Fed Inspector General Michael Horowitz on the cost overruns. She declined to commit to ending the investigation if Horowitz finds no criminal wrongdoing.

But for the moment, Pirro cannot compel the Fed to comply with demands for evidence, even if Boasberg were to override his earlier rulings. The term of the grand jury that issued subpoenas to the Fed has now expired, Pirro said in the motion.

Pirro noted in her filing Monday that a new investigation could still be forthcoming. If the judge agreed to vacate his decisions, legal wrangling would start anew.

Boasberg isn’t likely to grant the motion, Murphy said. The government’s rationale is “massive” retroactive continuity “on the timeline of this whole debacle,” he said.

Murphy has argued before Boasberg and has briefed the D.C. Circuit Court of Appeals.

Sen. Elizabeth Warren, D-Mass., and her fellow Democrats on the Senate Banking Committee last week voted against advancing the confirmation of Kevin Warsh, Trump’s nominee to replace Powell. They argue the nomination shouldn’t proceed while the Fed is still under legal threat.

“This is not what it looks like to close a criminal case,” Warren said in a statement.