Justice Department Drops Criminal Investigation Into Fed Chair Powell

Political Pressure Ends Controversial Probe

The Justice Department abruptly ended its criminal investigation into Federal Reserve Chair Jerome Powell on Friday, removing a major obstacle to President Trump's efforts to install a new leader at the nation's central bank. The Justice Department on Friday dropped a criminal investigation into the Federal Reserve and its chair, Jerome Powell, regarding a renovation project at the central bank's Washington headquarters.

U.S. Attorney Jeanine Pirro announced the decision to transfer the probe to the Fed's inspector general, effectively closing a controversial investigation that many lawmakers viewed as politically motivated. "This morning the Inspector General for the Federal Reserve has been asked to scrutinize the building costs overruns – in the billions of dollars – that have been borne by taxpayers," U.S. Attorney for D.C. Jeanine Pirro said in a post on X. "Accordingly, I have directed my office to close our investigation as the IG undertakes this inquiry."

The timing appears directly linked to Senate Republicans' resistance to confirming Trump's Fed nominee. Warsh's confirmation has been blocked by Sen. Thom Tillis due to what the Republican from North Carolina called a "bogus" investigation of Powell. "If we put everybody in prison in federal government that had had a budget go over, we'd have to reserve an area roughly the size of Texas for a penal colony," Tillis said earlier this week, at a Senate Banking Committee confirmation hearing for Warsh.

Renovation Costs Spark Unprecedented Investigation

The criminal probe centered on cost overruns during the Fed's massive headquarters renovation project, which ballooned from $1.9 billion to $2.5 billion. Pirro said she would instead ask the Fed's inspector general to look into the cost overruns, which have risen from $1.9 billion to $2.5 billion in recent years. And in a lengthy FAQ, the Fed laid out many of the details for the cost overruns: Asbestos abatement, a higher-than-expected water table and the rising cost of some raw materials contributed to the spiraling cost, it explained.

Federal prosecutors struggled to find evidence of criminal wrongdoing throughout the months-long investigation. A federal prosecutor in Washington, DC, told a judge last month that his office didn't have evidence of any crimes, but Pirro continued the probe and Trump said he supported the investigation. "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," Boasberg added.

The Fed's inspector general had already reviewed the renovation project twice and found no wrongdoing. The inspector general for the Federal Reserve has already reviewed the renovation project, and found no wrongdoing. The Fed's inspector general has reviewed the construction project twice. It found no wrongdoing. Security requirements from the Department of Homeland Security contributed significantly to the costs, including blast-resistant windows and reinforced walls.

Clearing Path for Trump's Fed Pick

The investigation's end immediately opens the door for Kevin Warsh's confirmation as the next Fed chair. In the meantime, the end of the investigation clears the way for Kevin Warsh, President Donald Trump's pick to succeed Powell, to get confirmed for the role. Warsh, a former Fed governor and Wall Street banker, has assured senators he won't automatically cut rates to please Trump.

Powell's term as Fed chair expires next month, though he could remain on the Fed's board of governors until 2028. Powell has not said whether he will step down from the Fed's board, which is the group that collectively decides on interest rates. His term as board member runs until 2028. This decision could significantly impact Trump's ability to reshape monetary policy, as Powell would retain voting power on interest rate decisions.

The controversy highlighted the unprecedented nature of a criminal investigation targeting the Fed chair during Trump's presidency. The Trump administration's extraordinary criminal investigation of Federal Reserve Chair Jerome Powell is over, removing significant uncertainty that had been clouding the future of the world's most important central bank. With global economic challenges mounting, including inflation pressures from ongoing conflicts, the resolution provides clarity for financial markets about the Fed's leadership transition.