U.S. Attorney Jeanine Pirro announced that federal prosecutors are ending their criminal investigation into Federal Reserve Chairman Jerome Powell, shifting the inquiry over potential cost overruns at the Fed's Washington, D.C., headquarters to the central bank's own inspector general. The move comes after a federal judge twice blocked the prosecution's subpoenas, and after a key Republican senator threatened to hold up President Trump's nominee to lead the Fed unless the probe was dropped.
The decision effectively removes what had become the single largest obstacle to Kevin Warsh's confirmation as the next chairman of the Federal Reserve Board of Governors. But the circumstances surrounding the probe's collapse raise pointed questions about how it was handled from the start, and whether the office of the D.C. U.S. Attorney overreached in a case a federal judge found rested on "essentially zero evidence" of criminal wrongdoing.
The investigation into Powell burst into public view in January, when Powell revealed in a video that the Fed had received grand-jury subpoenas as part of an ongoing criminal investigation. The subpoenas threatened an indictment tied to Powell's testimony before the Senate Banking Committee in June 2025 about the years-long project to renovate the Fed's offices.
The renovation, first approved in 2017, encompasses two buildings at the Fed's Washington headquarters. Its estimated cost has ballooned from $1.9 billion to nearly $2.5 billion. The Fed has attributed the increases to changes in building designs after consultations with review agencies, rising costs for materials, equipment, and labor, and unforeseen conditions including soil contamination and more asbestos than originally expected.
In March, Chief Judge James Boasberg of the U.S. District Court for the District of Columbia quashed the pair of subpoenas. Boasberg concluded they were a pretext to pressure Powell into voting to lower interest rates or resigning, a finding that, if accurate, would represent a serious misuse of prosecutorial authority. The Justice Department asked Boasberg to reconsider. He denied that request earlier this month.
The department did not appeal to the federal appeals court in Washington.
Pirro wrote on X that she was directing her office to close the investigation as the inspector general takes over. She said she was "confident the outcome will assist in resolving, once and for all, the questions that led this office to issue subpoenas."
But she left the door open. In a follow-up, Pirro added a pointed caveat:
"Note well, however, that I will not hesitate to restart a criminal investigation should the facts warrant doing so."
At a Wednesday press conference, Pirro told reporters, "this investigation continues," and confirmed her office is appealing Judge Boasberg's ruling. She also drew a line between the legal and political dimensions of the matter: "I am in the legal lane, there are others that are in the political lane. I don't intersect those two lanes."
That framing may be harder to sustain than Pirro suggests. The probe drew fire not only from the federal bench but from within the Republican conference itself. Pirro's office has faced a string of high-profile setbacks, including a grand jury's rejection of her push to indict Democratic senators over a separate matter.
The investigation's final chapter was not its finest. Prosecutors from Pirro's office made an unannounced visit to the Federal Reserve construction site and asked for a tour, even after Boasberg had already sharply limited the scope of the probe. Two prosecutors and an investigator were denied entry.
Federal Reserve counsel Robert Hur responded in writing, accusing Pirro's team of attempting to circumvent the court's ruling. Hur wrote: "As you know, Chief Judge James Boasberg has concluded that your interest in the Federal Reserve's renovation project was pretextual." He added: "Should you wish to challenge that finding, the courts provide an avenue for you; it is not appropriate for you to try to circumvent it."
The episode was not a one-off. As we previously reported, Pirro's prosecutors were turned away at Federal Reserve headquarters after that unannounced visit, reinforcing the impression that the office was pressing forward without the legal footing to justify its actions.
The Fed's Office of the Inspector General said it has been evaluating the renovation project since last July, including an independent analysis of what it described as "substantial cost increases and overruns." The IG's office said it is "actively working to complete our review, and look forward to making the results available to the public and Congress upon completion."
The inspector general at the Fed has twice conducted audits regarding renovation projects, giving the office a track record on the subject. The current IG, Michael Horowitz, previously served in the same role at the Justice Department, where he reviewed the origins of the FBI's investigation into the 2016 election and alleged ties between the Trump campaign and Russia, a review that uncovered significant procedural failures.
White House spokesman Kush Desai framed the handoff as a step toward accountability, not away from it:
"American taxpayers deserve answers about the Federal Reserve's fiscal mismanagement, and the Office of the Inspector General's more powerful authorities best position it to get to the bottom of the matter."
That argument has some merit. An IG review can compel document production and conduct interviews with a scope that a criminal probe, particularly one already blocked by a judge, could not achieve. But the Fed is self-funded and not reliant on taxpayer dollars, a distinction that complicates the "taxpayer accountability" framing.
The political stakes of the probe's closure are immediate. Republican Sen. Thom Tillis of North Carolina had said he would not vote to confirm any nominee to lead the Fed until the investigation was dropped. With Pirro's announcement, that roadblock disappears.
Warsh testified before the Senate Banking Committee on Tuesday, pledging that the central bank would remain "strictly independent" in its monetary policy decisions. The White House said it is confident the Senate will confirm him as the Fed's next chairman. Pirro's office has also been active on other fronts, including the permanent dismissal of Steve Bannon's Jan. 6 contempt indictment.
Powell's tenure as chairman is set to end in May, though he can remain a governor on the Fed's Board until early 2028. President Trump, who first tapped Powell for the chairmanship in 2018, and who later saw Joe Biden appoint Powell to a second four-year term, has frequently aired frustrations with Powell for declining to rapidly slash interest rates. Earlier this month, Trump threatened to fire Powell. He has called Powell "a jerk" and suggested the renovation cost overruns could themselves be grounds for removal.
Powell told the Senate last year that he asked the internal watchdog to "take a fresh look at the project." At one point, Trump and Powell visited the Fed's headquarters together wearing hardhats, a moment that now reads as a relic from a less contentious chapter.
Several questions linger. The specific criminal statutes under investigation were never publicly identified. The exact contents of the grand-jury subpoenas remain undisclosed. And while Pirro insists the investigation "continues" in the form of an appeal and the IG review, the practical effect is that no criminal charges were filed, no indictment was returned, and the subpoenas that launched the public phase of the probe were struck down twice.
Pirro has faced scrutiny beyond this case as well. She is currently pursuing a personal lawsuit against her hometown of Rye and Con Ed over a trip-and-fall incident, a reminder that the D.C. U.S. Attorney is no stranger to legal proceedings on multiple fronts.
The $600 million cost increase in the Fed renovation is real and deserves scrutiny. Taxpayers, or in this case, the institutions that fund the Fed, are right to demand answers when a project's price tag jumps by a third. But scrutiny and a criminal investigation are not the same thing. When a federal judge finds "essentially zero evidence" of criminal wrongdoing and concludes the subpoenas were pretextual, the proper response is to recalibrate, not to show up unannounced at the construction site.
Accountability is a conservative value. So is restraint in the use of prosecutorial power. The two are not in conflict, unless you forget which one comes first.
