The Justice Department has dropped a criminal investigation into the Federal Reserve after months of probing the independent central bank’s $2.5 billion building renovations and failing to turn up evidence of a crime.
U.S. Attorney Jeanine Pirro, the top federal prosecutor in D.C., said in a social media post Friday that she had closed the probe, though she added that it could resume later if the Fed’s inspector general finds evidence of wrongdoing in its own review of the construction project’s cost overruns.
“I will not hesitate to restart a criminal investigation should the facts warrant doing so,” Pirro said in a post on X.
A bipartisan group of lawmakers and a federal judge in D.C. had criticized the criminal investigation into Fed Chair Jerome H. Powell as an abuse of power by the Justice Department, which has pursued President Donald Trump’s perceived foes with often shaky allegations of criminal conduct since last year.
Pirro’s inquiry also became a political obstacle for the Trump administration’s planned succession at the Fed. Powell’s term as chair expires May 15, and Trump has nominated Kevin Warsh, a former Fed governor, to be the central bank’s next leader. But a key Republican senator, Thom Tillis of North Carolina, has been blocking that nomination until Pirro ended her “bogus” investigation.
Tillis did not immediately comment on Pirro’s move Friday, but it could clear the way for Warsh’s confirmation to move ahead, potentially avoiding a volatile standoff at the central bank.
Trump had threatened to fire Powell if he did not step down to make way for Warsh, but Fed officials said the law called for Powell to remain as acting chair until the Senate confirmed a successor. Separately, Powell’s term as one of seven members of the Fed’s board of governors runs until 2028.
“I have no intention of leaving the board until the investigation is well and truly over with transparency and finality,” Powell said last month. Any efforts to continue the criminal investigation could have taken months to resolve.
The Fed did not immediately comment on Pirro’s announcement Friday.
Pirro opened the criminal inquiry last year over brief congressional testimony that Powell gave about a large-scale renovation of the Fed’s historic headquarters overlooking the National Mall and the project’s cost overruns of more than $1 billion. She said she was investigating whether Powell made false statements to Congress and whether the cost overruns were driven by fraud, but a prosecutor from Pirro’s office admitted at a court hearing that the Justice Department did not have evidence of a crime, The Washington Post reported.
A Trump ally who is seen as a contender to become the next attorney general, Pirro had dismissed concerns that the criminal probe could delay Warsh’s Senate confirmation. For his part, Trump had repeatedly expressed support for the investigation, brushing off concerns that it could stall his succession plans for the Fed.
“I can’t imagine that [Powell] is taking money on construction. I can’t, but it’s possible,” Trump said in a CNBC interview this week, providing no evidence for such a suspicion. “But we have to find out.”
Powell has denied wrongdoing and called the investigation an attempt to erode the central bank’s independence.
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