Fed in Closed-Door Clash With DOJ Over Powell Probe

The Federal Reserve is mounting a behind-closed-doors legal fight against Justice Department subpoenas tied to U.S. Attorney Jeanine Pirro’s criminal investigation into Chair Jerome Powell — a probe that now hangs over Kevin Warsh’s nomination to lead the central bank, The Wall Street Journal reports.

At the heart of the investigation is testimony Powell delivered to Congress last summer about massive cost overruns in the Fed’s $2.5 billion headquarters renovation.

Pirro is examining whether Powell misled lawmakers during a Senate hearing when questioned about the project’s escalating price tag.

Powell has called the probe “improper,” publicly suggesting it is part of President Donald Trump’s broader pressure campaign to push the Fed toward lower interest rates and curb its independence.

In a January video statement, Powell framed the investigation as politically motivated.

But Pirro, a longtime Trump ally, has defended the inquiry, arguing that accountability does not stop at the doors of the central bank.

Subpoenas were issued after her office said repeated information requests went unanswered. The investigation formally opened in November.

The legal fight itself is playing out entirely out of public view. Because the matter involves a grand jury investigation, strict secrecy rules apply.

The Fed is seeking, in sealed court proceedings, to quash two Justice Department subpoenas that would require it to turn over records. The central bank’s specific legal arguments remain undisclosed.

Treasury Secretary Scott Bessent has sought to draw a distinction between an investigation and criminal charges.

“There were subpoenas issued. But that doesn’t have to mean that there are charges,” Bessent said on CNBC. He also defended the probe earlier this year, telling CBS: “Independence does not mean no accountability.”

Sen. Thom Tillis, R-N.C., has taken a harder line.

Tillis has repeatedly said he will not advance any Federal Reserve nominee — including Warsh — until the Justice Department’s investigation concludes.

With Democrats on the Senate Banking Committee also unwilling to move forward while the probe remains active, Tillis’ opposition effectively stalls Warsh’s path, despite Republicans holding a narrow 13–11 majority on the panel.

Meanwhile, President Trump has appeared largely nonplussed about the standoff.

Asked about Pirro’s probe earlier this month, Trump said she is “going to take it to the end and see,” while again criticizing the renovation project’s cost.