Justice Department Drops Federal Reserve Investigation, Clearing Path for New Leadership
Justice Department closes probe of Fed Chair Jerome Powell, removing key obstacle to Senate confirmation of Trump’s replacement nominee.
WASHINGTON, D.C. — The Department of Justice dropped its investigation Friday of the Federal Reserve and Chair Jerome Powell over building renovation costs, a move that could open the door for new Fed leadership next month and signaled a victory for North Carolina Sen. Thom Tillis.
U.S. Attorney Jeanine Pirro said her office closed the probe after requesting the Fed’s inspector general examine the cost overruns associated with a $2.5 billion renovation project at the Fed’s offices.
“The IG has the authority to hold the Federal Reserve accountable to American taxpayers. I expect a comprehensive report in short order and am confident the outcome will assist in resolving the questions that led this office to issue subpoenas,” Pirro wrote on X just after 10 a.m. Eastern.
Investigation Could Resume
Pirro cautioned that the closure does not permanently end potential criminal proceedings. “I will not hesitate to restart a criminal investigation should the facts warrant doing so,” she stated in her social media post.
Powell, whose term expires in May, has faced repeated public criticism from President Donald Trump, who threatened to fire the central bank chair if he did not lower interest rates. The Trump administration’s criminal inquiry into Powell over the renovation project has drawn suspicion from both parties.
Tillis Secures Political Victory
The decision represents a significant win for Sen. Thom Tillis, R-N.C., who had vowed to oppose Trump’s nominee to replace Powell unless the administration dropped what he called the “bogus” investigation.
Tillis’s opposition created a potential roadblock for Kevin Warsh, Trump’s pick and former Fed Board Governor, whose nomination requires committee approval. A favorable vote by Tillis on the closely divided Senate Committee on Banking, Housing and Urban Affairs is necessary to advance Warsh’s nomination, as all panel Democrats oppose him.
Legal Challenges Mount
The investigation faced legal setbacks before Friday’s announcement. A federal judge last month blocked the administration’s efforts to obtain certain documents through subpoenas, ruling that the probe was designed to harass Powell rather than pursue legitimate criminal concerns.
The controversy surrounding Powell’s tenure has highlighted tensions between the executive branch and the traditionally independent Federal Reserve. Powell has maintained that the central bank must operate free from political interference to effectively manage monetary policy.
With the investigation now closed, the Senate can proceed with consideration of Warsh’s nomination. The Banking Committee has not yet scheduled a confirmation hearing, but Friday’s development removes a key obstacle that had threatened to derail the nomination process.
The Fed’s inspector general is expected to release findings on the renovation costs in the coming weeks, according to Pirro’s statement. The outcome of that review could influence whether the Justice Department revisits the matter or closes it permanently.
