The investigation by the Justice Department into cost overruns during renovations at the Federal Reserve under chairman Jerome Powell is now being closed, as confirmed by U.S. Attorney Jeanine Pirro on Friday. Pirro mentioned that the Inspector General of the Federal Reserve will now be tasked with examining the building costs. She emphasized in a social media post that the Inspector General has the power to ensure accountability to American taxpayers and expects a detailed report promptly to address the concerns that prompted the issuance of subpoenas.
Despite the closure of the investigation, Pirro made it clear that she remains prepared to restart a criminal investigation if the circumstances require. Previously, a federal judge had blocked subpoenas to the Fed’s board of governors, ruling that they were improperly issued to pressure Powell into complying with President Donald Trump’s demands to lower interest rates quickly or resign. This development had led Pirro to vow to appeal the ruling and continue the investigation.
Powell’s term as chair is scheduled to end on May 15. The investigation conducted by Pirro had influenced Powell’s decision to remain in a Fed governor’s position until 2028, the final year of Trump’s presidency. Traditionally, Fed chiefs also step down from the board at the conclusion of their leadership terms.
The Trump administration’s actions against Powell, including the criminal investigation, had the potential to delay the Senate confirmation of Kevin Warsh, Trump’s nominee to replace Powell. Sen. Thom Tillis from North Carolina, a Republican member of the Senate’s banking committee, regarded the probe as an unwarranted attack on the Fed’s independence and vowed to withhold Warsh’s confirmation until the matter is resolved.
Critics, including Democrats and former Federal Reserve leaders, viewed the investigation into costs as a pretext to undermine the Fed’s independence from the White House. Trump had previously misstated the renovation costs, prompting a correction from Powell during a public appearance. Three out of the seven current governors at the Fed were appointed by former President Joe Biden, including Lisa Cook, whom the Trump administration has attempted to dismiss, a case that is pending in the U.S. Supreme Court.
Senator Elizabeth Warren, a member of the banking committee, criticized Friday’s announcement as an apparent attempt to facilitate the confirmation of “Trump’s sock puppet Kevin Warsh.” She highlighted the failure to drop the pursuit of Cook and Pirro’s commitment to potentially reopen a criminal probe into Powell. Warren cautioned that Trump’s efforts to influence the Fed are ongoing. Warsh, a former Fed governor, stressed the importance of monetary policy independence during his testimony to U.S. senators. He denied making any promises to Trump regarding interest rate cuts and blamed the current inflation surge on the central bank under Powell’s leadership following the COVID-19 pandemic.