Our Take
The DOJ's retreat from its appeal promise signals the investigation was more political theater than serious criminal probe.
Why it matters
Fed independence advocates now face confirmation of Kevin Warsh despite concerns the investigation could restart once he's confirmed.
Do this week
Financial services firms: review Fed communications policies before Warsh confirmation vote next week so you can prepare for potential regulatory shifts.
DOJ files motion to vacate instead of appeal
The Department of Justice asked a federal judge Monday to vacate his March decision blocking grand jury subpoenas in the investigation into Fed Chair Jerome Powell's congressional testimony about central bank building renovations. U.S. Attorney Jeanine Pirro abandoned her earlier promise to appeal District Chief Judge James Boasberg's decision to quash the subpoenas.
A motion to vacate asks the presiding judge to reconsider a previous decision. This represents a weaker legal option than the formal appeal Pirro had previously committed to pursuing. The deadline for filing a formal appeal was Monday.
Boasberg quashed the subpoenas in March, stating: "A mountain of evidence suggests that the government served these subpoenas on the board to pressure its chair into voting for lower interest rates or resigning."
Political deal clears Warsh nomination path
The move came after Pirro agreed to close the Powell investigation to secure Sen. Thom Tillis's (R-N.C.) support for Fed chair nominee Kevin Warsh. Tillis had blocked Warsh's nomination over concerns about the DOJ probe.
"It's no secret that the reason that Mr. Warsh's nomination could have been held up is because of my concern with the investigation," Tillis said at last week's Senate Banking Committee vote. Republicans now have sufficient votes to confirm Warsh in the full Senate, expected as early as next week.
However, Pirro preserved the DOJ's ability to reopen the investigation based on findings from the Fed Inspector General. "Should the United States Attorney open a new grand-jury investigation, the issuance of any future subpoenas would be based on a different record," the DOJ filing stated.
Warren warns of investigation restart
Senate Banking Committee ranking member Elizabeth Warren (D-Mass.) criticized the DOJ's approach as laying "the groundwork to restart its bogus investigation at any time." She characterized the move as not resembling "what it looks like to close a criminal case."
Powell announced last week he will not step down from his Fed board seat when his chairmanship expires, setting up potential continued tension with the incoming administration. The investigation centers on whether Powell violated the law in his congressional comments about Fed building renovations, though Boasberg's earlier ruling suggested the subpoenas were designed to pressure Fed policy decisions rather than pursue legitimate criminal concerns.