The Justice Department ended its criminal investigation of Federal Reserve Chair Jerome Powell, according to the AP, in a move expected to remove an obstacle to the Senate’s confirmation of Kevin Warsh as Powell’s successor. U.S. Attorney for the District of Columbia Jeanine Pirro said her office was stopping its probe into renovations at the Federal Reserve because the Fed’s inspector general would examine the cost overruns instead.
Pirro’s decision, announced on X on Friday, followed a case that had wound through the courts and centered on the Fed’s extensive building renovations. The probe focused on a $2.5 billion renovation that Trump criticized sharply last year for its cost overruns, with the investigation also covering Powell’s brief testimony about the project before the Senate Banking Committee last June.
Powell’s name has been tied to the renovation matter as part of Pirro’s investigation, including testimony from the construction site. The AP reported that Trump visited the building last July and, in a video filmed at the site, presented Powell with an inflated cost estimate; Powell corrected the estimate as the two stood at the construction site, according to the AP account.
The investigation also reached into federal court proceedings after prosecutors sought subpoenas from the Federal Reserve, and a judge later quashed them. The AP reported that in March, a prosecutor handling the Powell case conceded at a closed-door court hearing that the government had not found evidence of a crime. The judge, James Boasberg, wrote that prosecutors produced “essentially zero evidence” to suspect Powell of a crime and branded their justification for the subpoenas as “thin and unsubstantiated,” according to the AP.
Pirro said she would not hesitate to restart a criminal investigation if the facts warranted, the AP reported. The ending of the probe comes amid other legal efforts by the Trump administration aimed at perceived adversaries, including attempts to prosecute former FBI Director James Comey and actions by New York Attorney General Letitia James, which the AP said have not succeeded.
The Justice Department’s move also arrives against a backdrop of public pressure from Trump on the Federal Reserve’s interest-rate policy. The AP reported that the investigation was among several steps taken by the Trump administration aimed at influencing the Fed to cut its short-term interest rate, which the AP said indirectly affects borrowing costs for mortgages, auto loans and business loans.
Fed officials, including Powell, have said they want to keep rates unchanged while evaluating the impact of the Iran war and rising gas prices on inflation, the AP reported. In January, Powell said the investigation was not really about the renovation or his Senate testimony but instead reflected what the Federal Reserve does when it sets interest rates based on its assessment of the public’s needs rather than the president’s preferences, according to the AP’s account.
On the Senate side, the case had become a lever over Warsh’s path to the chair. The AP reported that Sen. Thom Tillis said he would oppose Warsh until the investigation was resolved, effectively blocking confirmation; Tillis’s stance was expected to end with the Justice Department’s decision. Powell’s term as chair ends May 15, and Warsh is the president’s pick nominated in January.
During Warsh’s Senate Banking Committee hearing on Tuesday, Republicans praised Warsh, while Democrats raised questions about his independence from Trump and about what they described as a lack of transparency around some of his financial holdings, the AP reported. Democrats also questioned what they said was Warsh’s flip-flopping on interest rates.
Warsh, the AP reported, said during the hearing that he never promised the White House to make any specific interest-rate decision. In his exchange under questioning by the Senate Banking Committee, Warsh said, “The president never once asked me to commit to any particular interest rate decision, period,” and “Nor would I ever agree to do so if he had.” The AP also reported that the comments came after Trump, in an interview on CNBC, said he would be disappointed if Warsh did not immediately cut rates.
The AP reported that Democrats questioned Warsh after Sen. Elizabeth Warren said he would be a “sock puppet” for Trump. Warren’s questioning included an exchange about the 2020 presidential election, when Warsh said only that the Senate certified Joe Biden as the winner, according to the AP account. When asked for an example of an economic policy on which he disagreed with Trump, Warsh did not name one, the AP reported.
While the criminal-investigation issue appears to be resolved, the AP said another question remains about whether Powell will stay on the Federal Reserve board after his chair term expires. Powell has said he would not leave until the investigation was dropped, and the AP reported that if he remains on the board it would limit Trump’s opportunity to fill another seat among the Fed’s seven members, three of whom are Trump appointees.