The Justice Department has dropped its criminal investigation into Federal Reserve Chairman Jerome Powell, clearing the way for President Donald Trump’s pick to replace him to be confirmed by the Senate.
The DOJ announced on Friday that it was ending the inquiry. The news marks the end of a contentious period in which Sen. Thom Tillis (R-NC), a member of the Senate Banking, Housing, and Urban Affairs Committee, was threatening to block Trump nominee Kevin Warsh from a confirmation vote.
U.S. Attorney Jeanine Pirro announced that the DOJ was dropping the investigation in a social media post. She said that, instead, the inspector general for the Fed has been asked to scrutinize the building cost overruns.
“I expect a comprehensive report in short order and am confident the outcome will assist in resolving, once and for all, the questions that led this office to issue subpoenas,” she said. “Accordingly, I have directed my office to close our investigation as the IG undertakes this inquiry.
“Note well, however, that I will not hesitate to restart a criminal investigation should the facts warrant doing so,” Pirro added.
TAKEAWAYS FROM KEVIN WARSH’S FED CONFIRMATION HEARING
Tillis supports Warsh as a nominee, but said that he would hold firm and not vote to advance Warsh’s nomination until legal proceedings into Powell were ended. Powell and others have decried the DOJ inquiry as politically motivated and a means to influence interest rate policy.
White House spokesman Kush Desai said that taxpayers deserve answers about the Fed’s “fiscal mismanagement” and that the inspector general’s “more powerful authorities best position it to get to the bottom of the matter.”
“The White House remains as confident as before that the Senate will swiftly confirm Kevin Warsh as the next Federal Reserve Chairman to finally restore competence and confidence in Fed decision-making,” Desai said in a statement provided to the Washington Examiner.
Earlier this year, in a video statement, Powell announced that he was under investigation by the Justice Department for claims he made about the Fed’s headquarters renovation during congressional testimony.
The buildings at the center of the renovation, the Eccles Building and 1951 Constitution Avenue, had an estimated renovation budget of $1.9 billion in 2023. By 2025, though, those costs had ballooned to $2.5 billion. Both are located near the National Mall in Washington.
During the hearing, Powell responded to questions about the added costs, including the fact that the remodeling included opulent touches, such as special dining rooms and luxurious marble.
Sen. Tim Scott (R-SC), chairman of the Senate banking committee, later followed up with Powell in a letter, saying that the only available construction plans for the building appear to contradict some of Powell’s statements and requested further clarification.
After his testimony, some, such as Rep. Anna Paulina Luna (R-FL), went further and accused him of lying to Congress. Luna submitted a referral to then-Attorney General Pam Bondi.
The Friday move effectively ends the blockade against Warsh, which will allow him to replace Powell as head of the central bank once his chairmanship is up on May 15.
Warsh faced major questions about Fed independence and how he would handle the agency during his confirmation hearing in April.
Warsh vowed repeatedly throughout the hearing that he would remain a faithful steward of the Fed’s independence if he were confirmed as its next chairman.
“Let me be very clear: Monetary policy independence is essential,” Warsh told the panel. “Monetary policy makers must act in the nation’s interest. Their decision is the product of rigor, deliberation, and unclouded decision-making.”
Still, he argued that politicians, including Trump, weighing in on interest rate policy is not necessarily a threat to Fed independence.
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“I do not believe that independence of monetary policy is threatened when elected officials state their views on rates,” he said. “Fed independence is up to the Fed.”
Tillis has said he intends to vote for Warsh. It is unclear when Warsh’s confirmation vote will be held, though if he is confirmed, he should be at the helm of the Fed by its meeting in June.
