WASHINGTON, March 13 - Legal filings made public on Friday show that attorneys representing Federal Reserve Chair Jerome Powell told Justice Department officials in late January that Powell might not leave the Federal Reserve's board of governors when his term as chair concludes in May. The comment, described in the unsealed documents, came during a January 29 meeting with U.S. District Attorney Jeannine Pirro and was cited by Justice Department lawyers opposing the Fed's effort to quash subpoenas in a criminal investigation into Powell's handling of renovations at the central bank's Washington headquarters.
The documents were part of a case in which the Fed sought to block the Justice Department from issuing subpoenas tied to that investigation. A District Court judge sided with the Federal Reserve on Friday and enjoined the subpoenas.
According to the Justice Department filing, Powell's lawyers told Pirro: "The Chair (Powell) feels like he would not leave the Board when his term as Chair expires, if he was still under investigation; and while he could not say the converse is true, it would be a different look to the Chair if he was not facing criminal investigation and the Chair would be free to make a decision that would focus on his family."
The unsealed material also reports that Powell's legal team told the prosecutor that, as of that January meeting, they believed President Donald Trump did not have the Senate support to confirm a new Fed chair. The filings say Powell's attorneys told the U.S. attorney: "as it stood President Donald Trump, who has pressured Powell to lower interest rates, 'does not have enough votes in the Senate to confirm a new Board Chair.'"
President Trump's nominee to replace Powell, former Federal Reserve Governor Kevin Warsh, has faced confirmation challenges, the filings note. Powell, who is 73, has not publicly outlined his plans for the end of his chairmanship. The unsealed documents underline that the possibility he could remain a board governor would carry weight because his seat could serve as a potential swing vote on the Fed's seven-member governing board.
By convention, chairs vacate their seat on the board when a new chair takes over. The filings point out there is no established precedent for a former chair remaining on the board while continuing to comment and vote on monetary policy, nor is there guidance in the record about how such a former chair would interact with a successor such as Warsh.
Powell's current term as a governor runs through January 2028. That timeframe would extend past the upcoming midterm elections in November and into the final year of President Trump's administration, according to the material in the filings.
The Federal Reserve did not comment on the substance of the unsealed documents.
Justice Department attorneys characterized the statements from Powell's counsel as an effort to exert pressure on the U.S. attorney, describing the remarks as "strongarming." The DOJ filing argued that by making what it called a "peculiar suggestion," the Fed effectively turned the subpoenas into the very political instrument the Fed had criticized - attempting to inject politics into the matter.
Context and implications in the filings
The unsealed papers present a factual account of discussions between Powell's legal team and Justice Department officials and record the DOJ's reaction to those comments. They illustrate both the legal dispute over the subpoenas and the sensitivities surrounding potential shifts in the composition of the Federal Reserve's governing board amid an active criminal investigation related to renovations of its Washington headquarters.
How a former chair would function as a governor while a successor serves as chair is not addressed in the filings and remains an open question, as does how any potential decision by Powell would affect the Fed's internal dynamics and the broader perception of the institution's independence.