The U.S. Department of Justice has terminated its criminal investigation into Federal Reserve Chair Jerome Powell over alleged cost overruns in a multi-billion-dollar renovation of the central bank’s headquarters in Washington, D.C. This decision paves the way for the Senate to confirm President Donald Trump’s nominee, Kevin Warsh, as Powell’s successor.
U.S. Attorney Jeanine Pirro announced the closure of the probe on Friday, shifting the scrutiny of the renovation costs to the Federal Reserve’s inspector general. The project, which involves modernizing the Eccles and 1951 Constitution Avenue buildings for the first time since the 1930s, includes critical health and safety upgrades like asbestos and lead removal. While the Fed estimates the cost at $2.5 billion, Trump has repeatedly claimed it ballooned to $3.1 billion, a figure Powell publicly corrected last year during a joint appearance.
The investigation’s end removes a significant obstacle to Warsh’s confirmation. Senator Thom Tillis, a North Carolina Republican on the Senate Banking Committee, had placed a hold on the nomination, refusing to advance it until the criminal probe was dropped. Tillis, along with Democrats and former Fed leaders, criticized the investigation as a politically motivated attack on the central bank’s independence, especially given Trump’s long-standing frustration with Powell over interest rate policies.
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Trump’s feud with Powell dates back to his first term, intensifying after Powell resisted demands for rate cuts. The president has also targeted Fed Governor Lisa Cook, with a separate criminal probe ongoing and a case to remove her pending in the U.S. Supreme Court. Senator Elizabeth Warren, the top Democrat on the Banking Committee, called the Powell investigation’s closure a maneuver to install Warsh as “Trump’s sock puppet” while warning that the Justice Department could reopen the case at any time.
Powell’s term as chair expires on May 15, though he plans to remain in his governor role, which extends to 2028, until Warsh is confirmed. White House spokesman Kush Desai expressed confidence in a swift Senate approval, stating Warsh would “restore competence and confidence in Fed decision-making.”
Senate Banking Committee Chairman Tim Scott, a South Carolina Republican, had earlier pushed for the probe to be handled by Congress rather than criminal courts, suggesting permanent oversight of Fed construction projects. “American taxpayers deserve answers about the Federal Reserve’s fiscal mismanagement,” Desai echoed in a statement.
The renovation controversy continues to simmer as the inspector general takes over the investigation. Pirro emphasized she would not hesitate to restart a criminal probe if new evidence emerges, keeping pressure on the Fed as it navigates a critical leadership transition.
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