Fed says it will continue revoking Jerome Powell subpoena

The Federal Reserve’s Board of Governors asked a judge to deny a request by prosecutors to reconsider a recent decision to suppress a subpoena issued in the criminal investigation into Fed Chairman Jerome Powell’s costly renovations to the central bank and his testimony to Congress about it.

In a court filing released Thursday, Fed lawyers told Judge James Boasberg that the U.S. Attorney’s Office for the District of Columbia fell even short of the legal threshold for a new trial.

“The motion for reconsideration…does not even address, much less meet, the stringent legal standards applicable to the extraordinary relief the Fed seeks,” Fed lawyers said in a motion filed in U.S. District Court in Washington.

The lawyers said a reconsideration would only be justified if there was a change in the law relevant to the issues in the case, new evidence was discovered, or “if it is necessary to correct a clear error or prevent a clear injustice.” Lawyers said nothing of the sort happened.

“Rather than attempting to clear these high hurdles,[the prosecution’s]motion relies on a mischaracterization of the court’s opinion and the record on which it is based,” the attorneys wrote.

The Fed’s argument was expected, as the board had tried to block the central bank from subpoenaing it in the first place, and that the subpoenas and criminal investigation were just pretexts to get Powell to agree to faster and deeper rate cuts, as President Donald Trump has repeatedly called for.

President Trump called Powell a “fed fool” in comments to reporters at the White House on Thursday.

This is similar to similar scathing statements President Trump has made in the past about the Fed chairman, which Boasberg cited at length in his decision, arguing that “the bottom line is that the president essentially spent years trying to get anyone to fire this troublesome Fed chairman.”

Trump also slammed the Federal Reserve on Thursday for overspending on building renovations, complaining that he was being sued for demolishing the East Wing of the White House to make way for a banquet hall while Powell appeared to be avoiding legal liability.

It’s unclear when Mr. Boasberg will rule on the dueling motions, or whether his office will halt its investigation into Mr. Powell if U.S. Attorney Jeanine Pirro loses her bid to have the judge vacate the March 11 ruling.

In a March 12 petition for reconsideration, Pirro’s office argued that Boasberg’s ruling “applied the wrong legal standard, erred on certain material facts, and overlooked other relevant facts.”

It is extremely rare for a judge to overturn a decision in such cases, and it is also rare for an appellate court to overturn such a decision.

Sen. Thom Tillis (RN.C.) has vowed to block Kevin Warsh from confirming Powell as Fed chairman until the investigation is complete.

In his harsh ruling, Mr. Boasberg rescinded two subpoenas from Federal Reserve Board prosecutor Pirro and others seeking records related to the multibillion-dollar central bank headquarters renovation project, as well as testimony before a Senate committee in which Mr. Powell “briefly discussed these renovations.”

The judge agreed with the Fed board’s argument that the subpoenas were issued for an improper purpose.

“There is abundant evidence that the primary, if not the only, purpose of the subpoena was to harass and pressure Mr. Powell into yielding to the President or resigning to make way for the Fed Chairman,” Boasberg wrote in his ruling.

The ruling came more than a week after Boasberg asked prosecutors in a closed court hearing, “What evidence is there of fraud or criminal activity related to the renovations?”

Prosecutor Masukko Lataif responded, “I don’t know at this point,” unsealed court records show.

“But there are 1.2 billion reasons why we look into it,” Masucco-Lataif added, referring to the project’s cost overruns.

“And I will submit to the court that the $1.2 billion cost overrun does not seem right,” said the prosecutor who heads the criminal division of Mr. Pirro’s office.

“This is the GDP (gross domestic product) of some small countries, but are we going to overlook it and say, ‘Is it just an excess because it’s a historic building?’ That doesn’t seem right,” Masukko-Lataif said. “And are we prohibited from investigating it? That, you know, seems to have a chilling effect on any investigation that the government has ever done.”

In his ruling, Boasberg said the prosecution’s argument against the subpoena was “a weak claim of legitimate purpose.”

“The government’s only justification for the renovation investigation at the press conference was that it was ‘significantly over budget and there is a risk of fraud,'” Boasberg wrote. “But buildings often go over budget. That fact alone does not suggest a crime has occurred.”

“Nor is there any reason to believe that this project is particularly susceptible to fraud,” the judge wrote, noting that the Fed’s “independent inspector general…has full access to project information regarding costs, contracts, schedules, and expenditures, and receives monthly reports on the construction program.”

“He audited the renovations several years ago and showed no concerns about fraud,” Boasberg noted.

President Trump slammed the cost of the renovations and the slow pace of progress in comments from the White House on Thursday.

“I would have built that building for $25 million. It probably cost $4 billion,” Trump said. “I passed by that building the other day, and it’s ‘see-through’. Do you know what ‘see-through’ means? There are no walls. ”

“But the National Trust for Historic Preservation, kidding, they didn’t sue that building, by the way, President Trump said.

“They’re going to sue me. I’m going to get sued, too. This can only happen to President Trump,” the president said.

“But they don’t sue someone whose rates are too high. That’s why we’re calling him too late. His name is Jerome Powell,” President Trump said.

“We call him Jerome ‘Too Late’ Powell, and he did such a bad job that eventually you’ll have flimsy little walls and flat little ceilings, but now you have nothing, and no one will sue this guy.”