The Department of Justice on Friday dropped its criminal investigation of Federal Reserve Chair Jerome Powell, removing a key obstacle to Senate confirmation of President Donald Trump’s Fed chair nominee Kevin Warsh, a development with potential implications for interest rates and the housing market.
U.S. Attorney Jeanine Pirro announced on X that she is closing the probe, redirecting the matter to the Fed’s inspector general to investigate cost overruns in the multibillion-dollar renovation of the central bank’s Washington headquarters.
Sen. Thom Tillis, R-N.C., had blocked a full Senate vote on Warsh’s confirmation until the investigation ended. The White House said it “remains as confident as before that the Senate will swiftly confirm Kevin Warsh.”
Pirro said she “will not hesitate to restart a criminal investigation should the facts warrant doing so.”
The Justice Department’s move comes amid a long-running conflict between the Trump administration and the Fed. Last year, for example, Trump suggested he could remove Powell, and additionally referred to the Fed chair as a “major loser,” among other things.
Federal Housing Finance Agency Director Bill Pulte has also frequently criticized Powell, accusing the Fed chair of engaging in a cover-up.
The criticisms have frequently focused on a $2.5 billion renovation of the Fed’s headquarters in Washington, D.C. The Trump administration believes the project has been mismanaged and that Powell lied about it to Congress. However, Trump’s critics have argued that the project is merely a pretext and that the president’s criticisms are political in nature. The Fed itself has also pushed back against Trump’s accusations.
Meanwhile, and against the backdrop of domestic and foreign economic uncertainty, the Fed has resisted pressure to lower interest rates — something Trump has repeatedly pushed for.
In January, Trump nominated Kevin Warsh to succeed Powell.
