Federal Reserve seeking to quash subpoenas in DOJ investigation, source says

The Federal Reserve has been mounting a closed-door effort to block the Justice Department's subpoenas for chairman Jerome Powell, CBS News has learned. In January, Powell revealed that the Federal Reserve had received grand jury subpoenas from the Justice Department as part of an ongoing criminal investigation into him. The subpoenas threatened a criminal indictment related to Powell's testimony before the Senate Banking Committee in June 2025, according to Powell. The chairman — who has drawn President Trump's ire for declining to rapidly slash interest rates — said the probe centered on his comments about a years-long renovation project at the Federal Reserve's office buildings. The probe has not resulted in any criminal charges. In sealed court proceedings, the Federal Reserve is challenging the legality of the subpoenas and asking a federal judge to quash them, according to a source familiar with the efforts. It's unclear specifically what the Federal Reserve's legal arguments are, and the challenge is taking place behind closed doors because of secrecy rules surrounding grand jury proceedings. The Wall Street Journal was first to report the Federal Reserve's move to quash the subpoenas. The independently funded renovation project and Powell's testimony came under scrutiny by the Trump administration last year, with Office of Management and Budget Chair Russell Vought accusing Powell of leading an "ostentatious" office renovation project that may be "violating the law." The renovations have faced cost overruns. In his testimony to the Senate, Powell called some descriptions of the renovation project as overly lavish "misleading and inaccurate." He told lawmakers there isn't any new marble aside from what's necessary to replace broken old marble and said there are no "special elevators," new water features or rooftop gardens. The questions about the renovations — and the subpoenas — followed a monthslong conflict between the Fed and Mr. Trump. The president has pressed the central bank to quickly lower interest rates in order to boost economic growth and lower borrowing costs, but the Fed has taken a more cautious tack, wary of causing inflation to spike. Meanwhile, the president has called Powell a "moron," a "stubborn mule," a "Trump Hater" and "Mr. Too Late." Powell argued last month that the criminal investigation was a pretext to put pressure onto the Fed and challenge its ability to set monetary policy independently.