Powell’s attorneys discussed the possibility of his remaining on Fed board

By Howard Schneider

WASHINGTON, March 13 (Reuters) – Attorneys for Fed Chair Jerome Powell raised the possibility he might remain as a member of the central bank’s board of governors after his term as chair ends in May, a precedent-breaking decision, at a meeting with the Department of Justice in January, documents unsealed on Friday said. 

The documents were part of a case in which the Fed sought to block Justice Department subpoenas in a criminal investigation into Powell’s handling of renovations of the central bank’s Washington headquarters. A District Court judge ruled in favor of the Fed and blocked the subpoenas on Friday.  

In an argument opposing the Fed’s motion in the case, a Department of Justice lawyer said Powell’s attorneys told U.S. District Attorney Jeannine Pirro at a January 29 meeting: “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.”

Powell’s attorneys also said, according to the document, that 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.” 

Trump’s nominee to succeed Powell, former Fed Governor Kevin Warsh, faces obstacles to confirmation. 

Powell, 73, has not stated publicly his plans for the end of his term, but the possibility he could remain as a governor would take on added significance, with his seat a potential swing vote on the Fed’s seven-member governing board.

By tradition Fed chairs leave their board seats when a new chair takes over, but concerns about Fed independence and Trump’s added impact if he fills another spot have stoked speculation Powell might remain.

There is no template for how he might function in the job as a former chair still commenting and voting on monetary policy,  or how he would relate to Warsh. 

Powell’s term as governor extends to January 2028, past upcoming midterm elections in November and during the final year of Trump’s administration.

The Fed had no comment about the material in the unsealed documents.

Justice Department attorneys in the document said they regarded the comments from Powell’s lawyers as “strongarming” the U.S. attorney with the suggestion he would leave the board if the investigation was withdrawn. 

“By making this peculiar suggestion, the Board morphed the Subpoenas into the exact thing about which they complain,” by trying to inject politics into the discussion, the document argued.

(Reporting by Howard Schneider; Editing by Cynthia Osterman)