Senior officials at the US Justice Department have lined up behind prosecutor Jeanine Pirro’s appeal after a federal judge threw out a grand jury subpoena tied to Jerome Powell, while Treasury Secretary Scott Bessent used the same news cycle to warn against Powell remaining on the Federal Reserve Board after his term as chair expires. The dispute over Fed independence has not eased since the subpoena was rejected. It has widened.
Justice Department backs appeal after judge rejected subpoena
Federal judge James Boasberg dismissed the grand jury subpoena on March 14, citing what the report described as a mountain of contrary evidence. People familiar with the matter said the ruling had offered the Trump administration a way to let the controversy fade, and that Trump had been open at the time to ending the investigation.
That did not hold. According to the report, Trump’s long-running belief that courts are biased against him, combined with anger over the ruling itself, pushed him toward supporting an appeal. Pirro then announced the appeal and called the judge’s decision “outrageous.” The Justice Department leadership is now formally backing that move.
Probe centers on renovation overruns and Senate testimony
The stated focus of the investigation is the Federal Reserve headquarters renovation project, which the report says ran into multibillion-dollar cost overruns, along with Powell’s related testimony before the Senate Banking Committee. Boasberg used unusually direct language in his ruling, saying the government had “basically provided zero evidence” that Powell committed a crime, and that the claims were so weak and unfounded that the court could only view them as pretext.
Powell has also said publicly that the real motive behind the investigation was his refusal to meet Trump’s demands for rate cuts. What began as a legal fight over a subpoena now sits at the center of a broader clash involving the White House, the Justice Department, and the Fed.
Bessent warns that staying on the Board would break precedent
In an interview with Maria Bartiromo, Bessent addressed Powell’s seat on the Board of Governors directly. Powell’s term as Fed chair ends on May 15, 2026, while his term as a governor runs until January 2028.
Bessent said that historically only one former chair stayed on as a governor, and that happened because the president asked him to remain. If Powell stays after stepping down as chair, Bessent said, it would “deviate from historical precedent” and create “market confusion.” The remarks were later highlighted by Wall Street Journal Fed reporter Nick Timiraos.
Powell’s own position has also been clear. He has said he will leave the chairmanship when that term expires, but has also stated that he does not intend to leave the Board until the investigation is fully over and there is transparency and finality.
Warsh nomination faces obstacles on two fronts
Trump wants Kevin Warsh to become the next Fed chair, but the path is blocked from more than one direction. First, Republican Senator Thom Tillis has said he will block all Federal Reserve nominations until the Justice Department investigation is finished. With unified Democratic opposition added to that, a Warsh nomination would struggle to clear the Senate Banking Committee.
Second, even if Warsh eventually takes the chair, Powell could still remain at the same table as a governor. That is the scenario Bessent tied to potential market confusion, and it extends the period in which traders and investors have limited visibility on the Fed’s policy path.
Political and legal conflict adds noise for risk assets
For risk assets, including crypto, pressure from Trump on rate policy is not new. Markets have dealt with that kind of noise before. This episode is different because the conflict has moved from public pressure campaigns into the courts, and because the participants now include the machinery of the Justice Department rather than Trump alone.
The timeline itself is straightforward: May 15, 2026 is when the chair seat opens, and January 2028 is when Powell’s governor term ends. The political and legal struggle between those dates is becoming a source of systemic uncertainty that markets will have to price on their own.