DOJ drops criminal probe of Fed Chairman Powell, paves way for Warsh
The Justice Department is dropping its criminal investigation into Federal Reserve Chairman Jerome Powell, a move that clears the way for President Trump’s nominee, Kevin Warsh, to lead the central bank.
Jeanine Pirro, the U.S. attorney in Washington, said Friday that her office was closing the Powell investigation, launched in January.
She wrote on
Prosecutors were investigating whether Mr. Powell lied to Congress during his testimony last summer about the cost of renovating the Fed’s headquarters in Washington.
“This morning, the Federal Reserve Inspector General was tasked with examining construction cost overruns – on the order of billions of dollars – that were borne by taxpayers,” Ms. Pirro wrote on X.
“The IG has the authority to hold the Federal Reserve accountable to American taxpayers,” she continued. “I expect a full report as soon as possible and am confident that its outcome will help resolve, once and for all, the issues that led this office to issue subpoenas.”
“Accordingly, I have directed my office to close our investigation while the IG undertakes this investigation.
“Please note, however, that I will not hesitate to relaunch a criminal investigation if the facts justify it.”
Mr. Powell’s criminal investigation focused on two historic buildings that the Fed was renovating. Originally estimated at $1.9 billion, the cost has since reached $2.5 billion.
Mr. Trump and some of his allies have claimed that Mr. Powell misled lawmakers about the cost of the overruns. The Fed linked the increase to soaring construction costs.
The Fed’s inspector general has already reviewed the project twice and found no wrongdoing. Last year, Mr. Powell asked the watchdog to reexamine it under pressure from the White House.
The decision clears the way for Mr. Warsh to advance toward a confirmation vote in the Senate.
Senator Thom Tillis, Republican of North Carolina, had threatened to block Mr. Warsh’s confirmation until the Justice Department dropped the criminal investigation.
At Mr. Warsh’s confirmation hearing on Tuesday, Mr. Tillis expressed his full support for the nominee, but warned that he would not vote yes until the investigation was complete.
“Let’s put this investigation aside so I can support your confirmation,” he told Mr. Warsh.
Mr. Tillis had the power to derail Mr. Warsh’s nomination. For Trump’s choice to advance, he must obtain a majority of votes in the Senate Banking Committee, made up of 13 Republicans and 11 Democrats.
If Mr. Tillis votes against the nominee, the panel will be split 12-12, and the nomination will fail.
The Federal Reserve declined to comment on the Justice Department’s announcement.
White House spokesman Kush Desai said in a statement that the administration remained confident that the Senate would “expeditiously” confirm Mr. Warsh in order to “restore competence and confidence in the Fed’s decision-making process.”
“American taxpayers deserve answers about the Federal Reserve’s fiscal mismanagement, and the most powerful authorities in the Office of Inspector General are best positioned to get to the bottom of the matter,” Mr. Desai said.
