The Department of Justice (DOJ) announced Friday it has officially concluded its criminal investigation into Federal Reserve Chair Jerome Powell. The decision, revealed by Jeanine Pirro, effectively removes a significant barrier to President Donald Trump’s nomination of Kevin Warsh to serve as the next chairman of the central bank.
The investigation centered on alleged cost overruns associated with the Federal Reserve's multibillion-dollar headquarters renovation project located in Washington, D.C. Pirro stated that her office was closing the probe and transferring further review of the matter to the Federal Reserve’s inspector general. While Pirro had previously indicated an intention to continue the investigation, she now emphasized the inspector general's authority to ensure the Federal Reserve's accountability to taxpayers. She also noted the possibility of reopening a criminal investigation should new facts emerge that warrant such action.
"dropping the Powell investigation was an attempt to clear the path for what she called Trump’s preferred nominee. She accused the administration of trying to politically control the Federal Reserve" — Senator Elizabeth Warren
This move carries substantial political weight. North Carolina Senator Thom Tillis (R) had previously indicated that he would block a full Senate confirmation vote on Warsh unless the Powell investigation was dropped. With the probe now closed, a major obstacle to Warsh's potential confirmation has been removed. Warsh had already testified before the Senate Banking Committee earlier in the week concerning his nomination.
The White House promptly lauded the DOJ's decision. Spokesman Kush Desai stated that taxpayers deserve answers regarding alleged mismanagement at the Federal Reserve and asserted that the inspector general was better equipped to conduct the necessary review. Desai also conveyed the administration's confidence that the Senate would swiftly confirm Warsh as the next Federal Reserve chairman. The Federal Reserve itself declined to offer immediate comment on the development.
The criminal probe into Powell had been a point of contention and speculation. Powell and his allies had contended that the underlying reason for the investigation was pressure from President Trump and his supporters to compel the Federal Reserve to adopt lower interest rates. President Trump has repeatedly voiced criticism of Powell's rate policy, advocating for a more aggressive easing stance from the central bank. It is notable that Powell had himself requested the inspector general to review the renovation project as early as July 2025, following public scrutiny over the costs, indicating that an internal oversight review was already underway prior to the DOJ's criminal probe being closed.
Congressional figures have offered varied perspectives on the matter. Republican Senator Tim Scott suggested that Congress, rather than prosecutors, should be the body to address the issues surrounding the renovation costs. Scott remarked that Powell appeared to be "incompetent rather than criminal" and proposed that lawmakers could establish permanent oversight of construction projects under the jurisdiction of the Senate Banking Committee.
Conversely, Democrats sharply criticized the DOJ's decision. Senator Elizabeth Warren characterized the dropping of the Powell investigation as an attempt to clear the path for what she termed President Trump’s preferred nominee. She accused the administration of endeavoring to exert political control over the Federal Reserve and cautioned that the Senate should not proceed with Warsh’s nomination under these circumstances.
The broader implications of this personnel decision are significant. The Federal Reserve holds immense power over the nation's economy, influencing interest rates, inflation strategy, and overall monetary policy. Its decisions directly impact mortgage rates, business lending, employment levels, and financial markets. Replacing Powell with Warsh would likely be one of President Trump’s most impactful economic personnel appointments, potentially steering the central bank in a new direction regarding its approach to monetary policy and economic management.
