Powell is sufficiently offended by the investigation that he could spite Trump by staying on the Fed Board as a voting member until his term expires.
Powell is sufficiently offended by the investigation that he could spite Trump by staying on the Fed Board as a voting member until his term expires.
T he Trump administration’s self-destructive investigation of Federal Reserve Chairman Jerome Powell has achieved a new level of farce.
On Tuesday, the Justice Department sent a pair of prosecutors and a federal investigator to the construction site of the Fed’s renovation project, apparently seeking a tour and to interview construction workers.
The Fed is an independent agency. The Trump administration concedes this point. Even as it seeks to nullify the independence of other administrative agencies, the Trump DOJ has told the Supreme Court that it accepts the Fed’s independence from executive control. Significantly, the Fed’s most important mission, involving monetary policy, is legislative in nature, not executive. As the Justice Department well knows, there are protocols with which it must comply (at least in non-emergency situations) when its agents want to seek information from other government entities in connection with a criminal investigation — especially if such entities are non-executive agencies. The DOJ is supposed to contact the agency so that it may take any objections to the inquiry up the chain of command and have counsel present to protect the agency’s legitimate interests.
Recall: One of President Trump’s major complaints about James Comey — an entirely valid complaint — is that the former FBI director, in violation of protocols, sent two agents to the White House in January 2017 to do a brace interview of the president’s then-national security adviser, Michael Flynn. Yet, non-compliant brace interviews at a government agency are just what the Trump DOJ has now tried to do at the Fed. In this instance, the investigators were told to scram, and rightly so.
The investigative team was acting under the auspices of Jeanine Pirro, Trump’s Senate-confirmed U.S. attorney for Washington, D.C. She is investigating whether Powell gave misleading testimony to Congress regarding alleged cost overruns in the lavish renovation project.
Pirro bristles at the suggestion that the investigation is motivated by the president’s political vendetta against Powell, whom he has pressured non-stop with juvenile taunts over interest rates and the president’s desire to replace Powell (not only as chairman but as a Fed Board member). But even if political motivation weren’t manifest from (a) the Trump DOJ’s robust record of weaponized law enforcement against the president’s enemies and scapegoats, (b) the dearth of incriminating evidence against Powell, and (c) the lack of any request from Congress that the DOJ probe whether the Fed chairman obstructed one of its committees, there is also (d) the fact that the first subpoenas in the probe were served on the Fed a day after a White House event at which the president berated DOJ prosecutors for their foot-dragging on investigations of Trump nemeses. To say nothing of Trump’s infamous social-media excoriation of then-Attorney General Pamela Bondi over the DOJ’s reluctance in pursuing cases against Trump’s political foes, and his recent firing of Bondi while still stewing over the paucity and failure of those prosecutions.
Pirro reacted with indignation when asked about sending investigators to the Fed. As the New York Times reports:
“Any construction project that has cost overruns of almost 80 percent over the original construction budget deserves some serious review,” she said in a statement on Tuesday in response to questions about her investigators’ presence at the Fed. “And these people are in charge of monetary policy in the United States?”
I confess to chuckling, and not just because I can hear Jeanine — whom I have known and liked for many years — saying this with exquisite comic timing. It instantly leapt to mind that, at $400 million, President Trump’s top vanity project, the planned East Wing ballroom, is actually 100 percent over its original $200 million construction estimate. Like the Fed’s renovation, the White House’s renovation is under the investigative jurisdiction of both the Washington, D.C., U.S. attorney and Main Justice. Like the Fed’s renovation, the ballroom boondoggle is not being billed to American taxpayers; but that said, the project under Powell’s domain is being funded by the Fed’s own bond-selling operations, whereas the president’s project is funded by well-heeled private donors and thus more vulnerable to corruption.
Now, could anyone seriously imagine a Trump DOJ official saying that a White House project that is even more over-budget than the Fed’s “deserves some serious review,” since, after all, “this guy is in charge of all executive policy in the United States”?
Um . . . nah.
What’s driving the latest investigative action, I assume, is the DOJ’s lingering anger over the quashing of its subpoenas to the Fed by Judge James Boasberg, the Obama-appointed chief judge of the federal district court in Washington and, like Powell, a target of the president’s social media ire. There is both confusion and misdirection about this.
When this issue arose, I observed a disconnect between the Trump administration’s public narrative and what it was more quietly representing in court. (Alas, this is not a rare occurrence.)
While Judge Boasberg clearly doesn’t like the Powell investigation (no one sensible should), he is cognizant of the broad discretion federal prosecutors have to use grand juries to investigate crimes. The discretion is not limitless: courts may narrow subpoenas that are overly broad compared to the government’s legitimate needs or that appear to be onerous “fishing expeditions” when there is little reason to suspect crime. In addition, as Boasberg more controversially explained, there is precedent for the proposition that judges may quash subpoenas — even if grounds for suspicion exist — if the investigation is improperly motivated, as he found the Powell probe was.
Knowing that quashing the subpoenas would be controversial, however, Boasberg first offered Pirro’s office the opportunity — out of the hearing of the public and the Fed, to preserve investigative secrecy — to explain to the court what evidence it had that Powell had actually made false statements to Congress. While the DOJ has kept up the public storyline that Powell could be corrupt, it leaves unmentioned that it declined Boasberg’s invitation to demonstrate that there was a serious basis to investigate Powell — leaving the judge to draw the rational conclusion that this is politically motivated lawfare.
All that said, while a federal judge has limited authority to narrow or quash grand jury subpoenas, the judiciary has no authority to tell the Justice Department whom or what it may investigate. According to the Times, it has been claimed by the Fed’s lawyer, Robert Hur (formerly special counsel on Joe Biden’s mishandling of classified information), that Boasberg has barred Pirro from conducting any investigation of the Fed and Powell due to lack of evidence. That is nonsense.
Hur is right that Pirro and the DOJ should not seek to collect evidence from the Fed without going through the appropriate channels. And if the Fed or Powell gets another subpoena, Hur can ask Boasberg to quash it. The court may not, however, prevent prosecutors from probing, no matter how baseless the probe appears to be.
On that score, Congress should be scrutinizing the Trump DOJ’s lawfare practices. Republicans appear to be too cowed to do so, but this will come back to bite them, just as it will bite Trump.
Next week, Kevin Warsh, the president’s highly qualified nominee to replace Powell as chairman, is scheduled to have a confirmation hearing. Senator Thom Tillis, the North Carolina Republican who is not seeking reelection and is thus immune from the president’s intimidation tactics, is vowing that — though he approves of Warsh — he will not allow his nomination to advance unless the Justice Department drops the Powell probe.
Powell is sufficiently offended by the investigation, moreover, that he could spite Trump by staying on the Fed Board (as a voting member, not chairman) until his term expires in 2028 — by which time, if Democrats win control of the Senate in the November midterms, or come close to doing so, Trump (by then, an even lamer duck) will not be able to get his preferred nominees confirmed. Not at the Fed, and maybe not anywhere.
As for congressional Republicans, what do they suppose Democrats are going to do to the Trump administration upon taking control of at least one chamber of Congress in January? It’s going to be nonstop hearings, with special attention placed on the Justice Department. And when the Democratic-controlled committee subpoenas start flying, and Republicans suddenly recover their voice to object to the politically motivated exploitation of investigative authorities, whom do they suppose will pay them the slightest bit of attention?