DOJ Drops Powell Probe: The Department of Justice abandoned its criminal investigation of Federal Reserve Chair Jerome Powell after a federal judge raised doubts about the probe’s legitimacy and Senate Republicans pushed back against the administration’s Fed nominee.
The episode spotlights a larger legal battle over presidential removal powers and the Fed’s independence — a question the Supreme Court may resolve this term, with lasting consequences for U.S. monetary policy.
The Department of Justice announced Friday that it has dropped its criminal investigation into Federal Reserve Chair Jerome Powell after suffering a major setback in federal court. The move is the latest episode in President Donald Trump’s repeated attempts to pressure the Federal Reserve over interest-rate policy, but it also brings into focus a broader constitutional fight over the Fed’s institutional independence and sets the stage for a consequential Supreme Court decision.
The Federal Reserve is the nation’s independent central bank, led by a single chair and governed by a Board of Governors whose members serve staggered 14-year terms. Board governors may be removed only "for cause" — for malfeasance, inefficiency, or neglect — a restriction designed to shield monetary policy from short-term political pressure.
Federal Reserve Chair Jerome Powell has resisted efforts to set interest rates on partisan grounds, drawing public demands and threats from President Trump. Those tensions helped spur a criminal inquiry by U.S. Attorney Jeanine Pirro into an over-budget renovation at the Fed’s Washington headquarters; prosecutors alleged misconduct related to Powell’s oversight of the project.
District Court Judge James Boasberg quashed initial subpoenas in the case, finding that the investigation appeared aimed at pressuring Powell to lower rates or to resign. Judicial scrutiny, combined with Republican Senate resistance to President Trump’s nominee to succeed Powell, Kevin Warsh — notably Senator Thom Tillis’s decision to slow Warsh’s confirmation — contributed to the DOJ’s decision to drop the case. The administration’s abandonment of the prosecution reads as both a tactical concession to Senate Republicans and an admission of a legal defeat.
If the White House truly wanted Powell removed, why pursue a criminal probe instead of outright firing him? The answer lies in legal limits on presidential removal powers. Trump previously tested those limits by attempting to remove Board member Lisa Cook, the first woman of color to serve on the Fed’s Board and a Biden nominee confirmed for a term through 2038. The Supreme Court allowed Cook to remain in office while it considers the case, signaling skepticism about the government’s claims and suggesting some justices view the Fed as constitutionally distinct from other agencies.
Pirro has said she may pursue an inspector general review and could reopen a criminal case depending on its findings. More immediately, the Supreme Court now faces a choice that could either reinforce or erode the remaining legal protections that insulate monetary policy from short-term political pressures. The outcome of related cases — including the one involving Lisa Cook and the court’s earlier handling of other independent-agency removals — could determine whether the Fed’s independence endures future political confrontations.
Bottom line: The DOJ’s withdrawal underscores both the legal barriers to removing independent Fed officials and the political limits on pursuing such removals through litigation. The Supreme Court’s forthcoming rulings may decide how strong that firewall remains.
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