The US Justice Department is closing its investigation into Federal Reserve Chair Jerome Powell, a move seen as removing a hurdle to the confirmation of Kevin Warsh, President Donald Trump’s nominee to lead the central bank, with Powell’s term as chair set to end on May 15.
US Attorney Jeanine Pirro said the criminal probe into cost overruns linked to renovations at the Federal Reserve’s Washington headquarters would be closed, with scrutiny now continuing through the Office of Inspector General (OIG), which has already been reviewing the project, Reuters reported.
“I have directed my office to close our investigation as the (inspector general’s office) undertakes this inquiry,” Pirro said in a social media post, adding she could restart a criminal investigation “should the facts warrant doing so.”
The move is also significant amid Trump’s long-running clash with Powell over interest rates and broader concerns over Federal Reserve independence.
The investigation had been examining the Fed’s $2.46 billion headquarters renovation project, including cost overruns and Powell’s statements to Congress last year.
Reuters reported the current budget is about $1.1 billion above its 2020 allocation, with increases attributed largely to rising labour and material costs.
According to The Guardian, the probe was first made public in January after Powell disclosed in a video that he had been subpoenaed by the Justice Department and said the investigation was being used to pressure the Fed over monetary policy.
It suffered a major setback last month when Chief US District Judge James Boasberg blocked subpoenas issued to the Fed’s Board of Governors, saying prosecutors had shown “essentially zero evidence” Powell committed a crime and finding the subpoenas were issued for an improper purpose.
The investigation had also stalled Warsh’s path to confirmation, with Republican Senator Thom Tillis saying he would not support the nomination while the probe remained active. During Warsh’s confirmation hearing, Tillis said, “Let’s get rid of the investigation so I can support your nomination.”
Trump had also defended scrutiny of Powell, saying last week, “whether it’s incompetence, corruption or both, I think you have to find out”.
Powell had said he had no intention of leaving the Federal Reserve Board until the matter was resolved “with transparency and finality”.
Pirro said the Fed’s internal watchdog would continue examining the matter and Senate Banking Committee chair Tim Scott has sought a briefing within 90 days.
The US Supreme Court is also expected by June to rule on whether Trump’s firing of Federal Reserve governor Lisa Cook was constitutional, leaving broader questions around central bank independence under scrutiny.
