Federal Reserve Chair Jerome Powell Probe Dropped by DOJ: Who Benefits

The U.S. Department of Justice has ended its criminal investigation into Federal Reserve Chair Jerome Powell, removing a major obstacle to the Senate confirmation of Kevin Warsh as the next central bank chief. U.S. Attorney for the District of Columbia Jeanine Pirro said the probe would be closed and referred to the Federal Reserve’s inspector general, which had already been reviewing the building renovation project at the center of the dispute.

The investigation focused on Powell’s statements about the Federal Reserve’s headquarters renovation in Washington and the rising cost of the project. The issue became politically charged after criticism from President Donald Trump and several Republican lawmakers, who questioned the price and scope of the work. Powell had denied reports that the project included luxury additions and said cost increases were driven by inflation, required design changes, and unexpected construction issues such as asbestos.

The case became more contentious in March when a federal judge blocked DOJ subpoenas tied to the investigation. Court proceedings later showed prosecutors had not presented evidence of criminal conduct. The judge described the basis for the subpoenas as thin and unsupported. That court setback left the inquiry under added scrutiny before Pirro formally closed it on April 24.

Probe Ends After Months of Political and Legal Pressure

The renovation controversy began gaining national attention in mid-2025 after media reports questioned the project’s nearly $2.5 billion cost. Republican senators, including Banking Committee Chair Tim Scott, demanded answers from Powell. The White House also joined the criticism, with Office of Management and Budget Director Russell Vought and Federal Housing Finance Agency Director Bill Pulte publicly challenging Powell’s account of the project.

Powell responded with letters to lawmakers and the administration, and he asked the Fed’s inspector general to examine the project. Trump later visited the site with several allies, including Scott and Senator Thom Tillis. The matter then escalated into a criminal investigation under Pirro’s office in November 2025, centered on alleged false statements Powell made during Senate testimony.

Powell publicly disclosed the DOJ probe in January 2026 and described it as an attempt to pressure the central bank over interest rate policy. The investigation drew criticism from lawmakers in both parties who said it risked undermining Fed independence. Tillis then said he would block any Federal Reserve nominee while the case remained open, a position that became central once Trump nominated Warsh in late January.

Warsh Confirmation Moves Back to the Front of Senate Agenda

With the probe now closed, Warsh’s nomination is back at the center of Senate action. Tillis had made clear that he would not support the nomination while the investigation into Powell remained active. That stance effectively slowed the process because Tillis is a key vote on the Senate Banking Committee.

Warsh appeared before the committee earlier this week and said he had not promised the White House any particular course on interest rates. He told senators that Trump had never asked him to commit to a rate decision and said he would not have agreed if such a request had been made. His testimony came as Democrats questioned his independence and some of his policy reversals.

The next step is likely a committee vote on Warsh, followed by a full Senate vote if he advances. Powell’s term as chair ends on May 15, which puts added focus on the timing of the process. Senate Republicans praised Warsh during the hearing, while Democrats pressed him on whether he would act independently from Trump if confirmed.

Fed Governance and Policy Remain in Focus

Even with the criminal case closed, some questions remain. Powell has said he would not leave the Fed Board while the investigation was still active, but he has not said whether he will stay on as a governor after his term as chair ends. His separate term on the board runs until January 2028, so his decision could affect whether Trump gets another vacancy to fill.

Pirro said she would not hesitate to reopen a criminal investigation if facts later support doing so, though the current matter has now moved to the Fed’s internal watchdog. That means the renovation project will still face review, but outside the DOJ’s criminal process.

The broader issue of Federal Reserve independence is also likely to remain part of the debate. Trump has repeatedly called for lower interest rates, while Powell and other Fed officials have said they want more time to assess inflation risks, including the effect of higher energy prices linked to the Iran war.