Justice Department Ends Criminal Probe of Fed Chair Powell, Likely Clearing Path for Warsh Confirmation
Why It Matters
The fate of the Federal Reserve’s leadership — and by extension, the interest rates that affect mortgages, auto loans, and business borrowing for millions of Americans — shifted significantly on Friday when the Justice Department dropped its criminal investigation into Fed Chair Jerome Powell. The move clears what had been a significant procedural obstacle to confirming Powell’s nominated successor, Kevin Warsh.
With Powell’s term as Fed chair ending May 15, the timeline for confirming a replacement is tight. Markets and borrowers across the country are watching closely, as uncertainty at the Fed’s top post can rattle financial confidence and influence lending conditions nationwide.
What Happened
U.S. Attorney for the District of Columbia Jeannine Pirro announced Friday via X that her office was closing its investigation into the Federal Reserve’s costly building renovations, citing a decision to defer to the Fed’s own inspector general to scrutinize the project instead.
The probe had centered on a $2.5 billion renovation of the Fed’s headquarters — a project that had originally been estimated at $1.9 billion. President Donald Trump had sharply criticized the cost overruns and in July 2025 visited the construction site, where he presented Powell with an inflated cost estimate, which Powell corrected on camera while both men stood at the site wearing hard hats.
The investigation had also encompassed Powell’s testimony before the Senate Banking Committee last June regarding the renovation. Pirro noted that her office would not hesitate to reopen a criminal inquiry “should the facts warrant doing so.”
By the Numbers
- $2.5 billion — the current cost estimate for the Fed’s headquarters renovation that sparked the probe
- $1.9 billion — the earlier projected cost of the same renovation project
- May 15 — the date Powell’s term as Fed chair expires
- 13 days — how quickly the Senate confirmed Trump’s previous Fed board nominee, Stephen Miran, after his nomination
- ~3.6% — the Fed’s current short-term interest rate, which Trump has repeatedly demanded be cut to 1%
Probe Collapsed Under Legal Scrutiny
The investigation had struggled to gain legal footing almost from the start. At a closed-door court hearing in March, a prosecutor handling the case conceded that the government had not found evidence of a crime. Federal Judge James Boasberg subsequently quashed subpoenas issued to the Federal Reserve, stating that prosecutors had produced “essentially zero evidence” to suspect Powell of criminal conduct and characterizing the government’s justification for the subpoenas as “thin and unsubstantiated.”
The Justice Department’s investigation of Powell was one of several probes targeting perceived adversaries of the Trump administration. Similar efforts against New York Attorney General Letitia James and former FBI Director James Comey also failed to produce prosecutions.
Powell himself characterized the probe in January as not genuinely about the renovation but rather as “a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President.”
Warsh Confirmation Path Clears
Trump nominated Kevin Warsh, a former top Fed official, in January to replace Powell. Sen. Thom Tillis, a North Carolina Republican, had previously stated he would oppose Warsh’s confirmation until the Powell investigation was resolved — a position that effectively blocked the nomination from moving forward.
With the probe now closed, that obstacle is removed. During a Senate Banking Committee hearing Tuesday, Republicans praised Warsh’s qualifications, while Democrats raised concerns about his financial disclosures and what they described as inconsistency on interest rate policy.
Warsh sought to address independence concerns directly, stating under questioning: “The president never once asked me to commit to any particular interest rate decision, period. Nor would I ever agree to do so if he had.” His remarks came hours after Trump told CNBC he would be disappointed if Warsh did not immediately cut rates upon taking office. You can follow related Senate developments in stories like Sam Mead’s U.S. Senate campaign in Wyoming and the Senate GOP budget blueprint advancing border security funding.
What’s Next
With the Justice Department’s investigation closed and Sen. Tillis’s stated objection presumably resolved, the Senate Banking Committee is expected to advance Warsh’s confirmation to a full Senate floor vote. Given the May 15 expiration of Powell’s chairmanship, lawmakers face pressure to move swiftly to avoid a leadership gap at the nation’s central bank.
The Fed’s independent inspector general will continue examining the building renovation cost overruns, which Powell himself had previously requested. Meanwhile, the Fed’s monetary policy course — particularly around interest rates and the economic uncertainty created by rising energy prices — remains a central point of political and financial debate heading into the summer.
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