Prosecutor told judge no evidence existed to criminally pursue Powell over costly Fed renovations

By Devan Cole, CNN

(CNN) — A federal prosecutor in Washington, DC, told a judge this month that his office didn’t have evidence of any crimes by Federal Reserve Chair Jerome Powell in a costly renovation of the central bank’s headquarters – despite subpoenas over the matter, which the judge later quashed.

At a high-stakes hearing on March 3, the prosecutor, George A. Massucco-LaTaif, was asked, “What evidence is there of fraud or criminal misconduct in relation to the renovations?”

“We do not know at this time,” Massucco-LaTaif responded, according to a now-unsealed transcript of the court proceedings. “However, there are 1.2 billion reasons for us to look into it.”

The Department of Justice’s criminal investigation into Powell in January came after months of railing by President Donald Trump against Powell for not lowering interest rates faster. Trump’s complaints ranged from personal insults against the banker to accusations of impropriety and incompetence in cost overruns in the $2.5 billion Fed renovation.

The DOJ probe heightened fears that the administration wants to erode the Fed’s independence, which could leave the door open for political interference in setting interest rates for the world’s largest economy.

Massucco-LaTaif pushed back strongly on March 3 when Boasberg, an appointee of President Barack Obama, asked whether prosecutors could submit such evidence of a crime to him under seal. Massucco-LaTaif argued such a move was unnecessary because “you don’t need this grand suspicion of illegal activity,” according to the court transcript.

“It can be something as simple as a tip or a rumor or something that just doesn’t seem right,” he said, adding later: “I would submit to the Court that a $1.2 billion overrun of cost… doesn’t seem right.”

Massucco-LaTaif told Boasberg: “$1.2 billion, that’s the GDP of some smaller countries, yet we are going to overlook it as, oh, it’s just overrun because it’s a historical building? That doesn’t seem right.”

“And are we prohibited from looking into it? That would seem to, you know, put a chilling effect on any investigation the government ever did,” he added, according to the transcript.

Powell had stayed mostly mum in the face of Trump’s attacks, but just a few days after he was served with a subpoena in early January, the Fed chief released a remarkable video calling the investigation part of political pressure campaign.

The week after Massucco-LaTaif’s remarks, Boasberg quashed the subpoenas. In a stinging ruling, he said the government “produced essentially zero evidence to suspect Chair Powell of a crime.”

“Indeed, its justifications are so thin and unsubstantiated that the Court can only conclude that they are pretextual,” he wrote.

Powell’s term as chair expires in May, and Trump in January nominated former Fed Governor Kevin Warsh to run the central bank. But Republican Sen. Thom Tillis, a key vote on the Senate Banking Committee that would confirm the nomination, has said the committee should not consider a vote until the criminal probe of Powell is resolved.

The Washington Post first reported the prosecutors’ remarks from a court transcript Tuesday.

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