Justice Department drops investigation into Federal Reserve and Jerome Powell

The Justice Department on Friday dropped a criminal investigation into the Federal Reserve and its leader, Chair Jerome Powell, regarding a renovation project at the central bank’s Washington headquarters.

“This morning the Inspector General for the Federal Reserve has been asked to scrutinize the building costs overruns – in the billions of dollars – that have been borne by taxpayers,” said U.S. Attorney for D.C. Jeanine Pirro in a post on X.

“Accordingly, I have directed my office to close our investigation as the IG undertakes this inquiry.”

Pirro added that she would “not hesitate to restart a criminal investigation should the facts warrant doing so.”

The Inspector General for the Federal Reserve has already reviewed the project twice, and found no wrongdoing. It was asked again to review the project in 2025 by Powell, amid unrelenting pressure from President Donald Trump and his top allies.

The decision clears the way for Trump’s nominee to chair the Fed, Kevin Warsh, to advance towards a confirmation vote in the Senate.

Warsh’s confirmation has been blocked by Senator Thom Tillis, R-N.C., since Trump tapped Warsh for the role, due to what Tillis called a “bogus” investigation of Powell.

Tillis and numerous other lawmakers have said it did not appear Powell committed any crime.

The Federal Reserve declined to comment on Pirro’s announcement.

The criminal probe from Pirro’s office centered on the renovation of two historic buildings owned by the central bank.

The Fed, which said that the buildings “have not been comprehensively renovated since their construction in the 1930s,” initially pegged the cost for the project at around $1.9 billion. However, the cost rose to around $2.5 billion in the years since that first estimate.

The central bank said the cost increases were due to unforseen changes to the plans, the rising cost of raw materials, equipment, and labor. It also said that it uncovered more asbestos on the site than expected as well as a sinkhole.

But Trump and his top political allies seized on the project in an attempt to show that Powell was mismanaging the Fed.

Trump toured the construction site last summer, joined by Federal Housing Finance Administration chief Bill Pulte, Senate banking committee chairman Tim Scott, R-S.C., and other White House officials. During the visit, Trump confronted Powell about the cost, saying that he heard it had risen to “about $3.1 billion.”

In a remarkable moment on live television, Powell told the president he was wrong. “I haven’t heard that,” he said.

Other White House officials, such as budget chief Russell Vought, had likened the project to the Palace of Versailles in France.

Vought also claimed that Powell was “guilty” of “fiscal mismanagement” at the Fed. The project was first approved by the Fed’s seven board members in 2017, a year before Powell became its chair.

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