By Nicole Goodkind
Jerome Powell's lawyer told federal prosecutors in January that the Federal Reserve chair feels he would remain on the central bank's board of governors past the expiration of his chairmanship if the criminal investigation into him stays open, according to the government's account in newly unsealed court documents filed Friday.
The disclosure came from prosecutors, not Powell's team. But if accurate, it means the fate of the Federal Reserve's leadership transition now is directly tied to the outcome of a Department of Justice investigation.
Powell's term as Fed chair expires May 15. By tradition, departing chairs leave their board seats when a successor is sworn in. But Powell's term as a sitting governor doesn't expire until January 2028, meaning nothing in the law requires him to go. If he stays, he could remain a voting member of the Federal Open Market Committee through the midterm elections and into the final year of the second Trump administration.
According to the government's filing, Powell's personal attorney conveyed four points to U.S. Attorney Jeanine Pirro at a Jan. 29 meeting: that the president lacks the Senate votes to confirm a new board chair; that Powell believes Fed independence requires he not be pushed out; that he would not leave his board seat when his chairmanship expires if the investigation remained open; and that while the reverse wasn't guaranteed, a different outcome might be possible if the probe were dropped. The Justice Department characterized the exchange as "strongarming" the U.S. attorney.
The Federal Reserve didn't immediately respond to requests for comment.
The Jan. 29 meeting was a byproduct of a legal skirmish between the Fed and the Justice Department. Last June, Powell testified before the Senate Banking Committee about cost overruns on the Fed's $2.5 billion Washington headquarters renovation. Prosecutors said his testimony may have contained discrepancies.
In late 2025, the U.S. Attorney's Office opened a grand jury investigation into whether the overruns constituted fraud and whether Powell had made false statements to Congress. The office said it contacted the central bank in December seeking a meeting and that the Fed never responded.
Grand jury subpoenas arrived in January. Powell responded publicly, calling them a political weapon. "The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President," he said.
On March 11, Chief Judge James Boasberg of the U.S. District Court for the District of Columbia quashed the subpoenas. In a 27-page opinion unsealed Friday, he found they served no legitimate law enforcement purpose. "The Government has offered no evidence whatsoever that Powell committed any crime other than displeasing the president," Boasberg wrote. "The only reasonable inference is that the Government targeted Powell out of malice or an intent to harass."
Pirro called Boasberg an "activist judge" at a press conference Friday and said his ruling was "untethered to the law." Pirro said the Justice Department would appeal.
"Jerome Powell is now bathed in immunity, preventing my office from investigating the Federal Reserve," she said. "This is wrong, and it is without legal authority." When a reporter noted that the appeal would continue to block Trump's Fed nominee from being confirmed, Pirro was dismissive. "I don't care. I'm in a legal lane. The rest is just white noise."
That nominee, former Fed governor Kevin Warsh, has been stalled in the Senate since the probe began. Sen. Thom Tillis of North Carolina, a critical Republican vote on the Senate Banking Committee, vowed to block Warsh until the Powell investigation was resolved. The court ruling didn't move him. "Appealing the ruling will only delay the confirmation of Kevin Warsh as the next Fed Chair," he wrote Friday.
TD Cowen analysts said Friday that the probability of Powell remaining past May 15 has risen, given both the appeal and the government's account in the unsealed documents.
There is no established precedent for how a former chair would function alongside a sitting one, how he would vote, how markets would interpret any disagreement between them, or how a Trump-appointed chair would navigate sharing a boardroom with his predecessor.
RSM chief economist, Joe Brusuelas, argued that a prolonged Powell tenure could reassure markets. "Central bank independence is the sine qua non [indispensable condition] of the modern American economy," he wrote Friday. "Its erosion is not in the interest of the U.S. economy."
The White House, in a statement, didn't address the contents of the unsealed documents.
"Kevin Warsh's academic credentials, private sector success, and prior experience on the Fed Board of Governors make him eminently qualified to serve as the next Fed Chairman," White House spokesman Kush Desai told Barron's. "The White House is working closely with Congress to swiftly confirm Warsh and restore confidence, competence, and credibility to the Federal Reserve."
Write to Nicole Goodkind at nicole.goodkind@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
March 14, 2026 12:34 ET (16:34 GMT)
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