DOJ drops criminal probe into Federal Reserve chairman

The Department of Justice closed its criminal investigation into Federal Reserve Chairman Jerome Powell, U.S. Attorney for the District of Columbia Jeanine Pirro wrote on social media Friday. Instead, the inspector general for the Federal Reserve will investigate alleged cost overruns with the building’s renovation project, she said. The renovation of the Fed’s Washington headquarters currently has a budget of $2.46 billion, up from an initial estimate in 2023 of $1.9 billion. President Donald Trump has claimed Powell is misusing and wasting the funds and that a renovation should not be that expensive.

Pirro expected the report on the cost overruns to be finished soon. She said she wouldn’t hesitate to start a criminal investigation again if needed. The closure of the investigation now clears the way for the Senate to confirm Powell’s replacement, Kevin Warsh.

What was the holdup? Sen. Thom Tillis, R-N.C., said that he would not vote for any Fed nominee while the Justice Department was actively investigating Powell, which he called an attempt to intimidate the Federal Reserve Board, which functions independently. As a member of the Senate Banking Committee, Tillis could be the deciding vote on whether to pass a nominee to a floor vote. During Warsh’s confirmation hearing this week, Tillis said he was highly qualified but could not move forward until the Trump administration left Powell alone.

In a rare video statement in January, Powell said the investigation was not about the building project but instead about trying to pressure him into lowering interest rates. Warsh said during his hearing that Trump did not ask him to do so. 

Dig deeper: Listen to my report about Warsh’s confirmation hearing on The World and Everything in It podcast.