The Department of Justice announced Friday that it is dropping its criminal investigation into Federal Reserve Chair Jerome Powell and his handling of renovations at the central bank, shifting the inquiry to the Fed's own inspector general and removing a key obstacle to the confirmation of Powell's nominated successor.
U.S. Attorney for the District of Columbia Jeanine Pirro disclosed the decision in a social media post, saying she had asked the Fed inspector general to take over the review of Powell and the bank's renovation spending. The move closes a probe that DOJ launched in December, but it does not close the book.
The announcement matters for two immediate reasons. First, it transfers accountability for the Fed's renovation cost overruns from prosecutors to the inspector general, whose office carries broad auditing authority over the central bank. Second, it clears the political path for Kevin Warsh, the former Fed board member President Trump nominated to replace Powell as chairman, to advance toward Senate confirmation.
The criminal investigation centered on whether Powell mishandled, or misrepresented, the cost of renovations at the Federal Reserve's Washington, D.C., headquarters. The Washington Times reported that the probe examined whether Powell lied to Congress about renovation cost overruns that ballooned from an initial estimate of $1.9 billion to $2.5 billion.
That is a $600 million gap, real money, even by Washington standards. And the question of whether the Fed chairman gave Congress accurate information about how taxpayer-adjacent resources were being spent is not a trivial one.
Pirro's office had issued subpoenas during the investigation. In her Friday statement, she framed the referral to the inspector general as the more effective route to answers, as The Hill reported:
"The IG has the authority to hold the Federal Reserve accountable to American taxpayers. I expect a comprehensive report in short order and am confident the outcome will assist in resolving, once and for all, the questions that led this office to issue subpoenas."
She added a pointed warning. Pirro stated that she had "directed my office to close our investigation as the IG undertakes this inquiry," but made clear she would "not hesitate to restart a criminal investigation should the facts warrant doing so."
That is not the language of an office walking away from the matter. It is the language of a prosecutor who believes the questions remain open but has concluded the inspector general is better positioned to dig into them.
The DOJ probe had created an unusual political problem. Sen. Thom Tillis, a retiring North Carolina Republican on the Senate Banking Committee, reiterated last week that he would not support any Trump nominee to lead the Fed until the Justice Department wrapped up its investigation. Given the committee's narrow 13-11 GOP majority, Tillis's opposition alone could block a nominee from advancing to a full Senate vote.
The pattern of federal investigations becoming entangled with political confirmations is not new. It echoes the broader landscape of high-profile DOJ probes that have intersected with Washington's political calendar, a dynamic visible in cases ranging from the criminal probe of former CIA Director John Brennan to other investigations touching Trump-era figures.
Tillis had dismissed the Powell investigation as a baseless political pressure campaign. Yet at Warsh's confirmation hearing before the Banking Committee earlier this week, Tillis praised the nominee and pledged to support him as soon as the probe ended. The Washington Times reported that Tillis told Warsh directly: "Let's get rid of this investigation so I can support your confirmation."
Friday's announcement gives Tillis exactly what he asked for. With the criminal probe formally closed, the stated reason for his holdout disappears.
White House spokesperson Kush Desai expressed confidence in Warsh's path forward. His statement made clear the administration views the inspector general's office as the right venue for the remaining questions about the Fed's spending.
"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."
Desai added that "the White House remains as confident as before that the Senate will swiftly confirm Kevin Warsh as the next Federal Reserve Chairman to finally restore competence and confidence in Fed decision-making."
That framing, "fiscal mismanagement", is worth noting. The White House is not treating the closure of the criminal probe as an exoneration of Powell or the Fed's handling of the renovation project. It is treating it as a transfer of the accountability mechanism, not a surrender of the underlying concern.
The distinction matters. Federal inspector general offices carry subpoena power, auditing authority, and the ability to refer findings back to prosecutors if criminal conduct surfaces. The decision to shift the inquiry is not the same as deciding there is nothing to find.
National Review noted that the probe was closed specifically in favor of the inspector general review, with the explicit caveat that a criminal case could be reopened. The New York Post likewise reported that prosecutors characterized the multibillion-dollar cost overruns as the central issue and described the IG referral as the next step rather than the final word.
The broader question, whether federal agencies can spend hundreds of millions of dollars beyond their original estimates without meaningful scrutiny, is one that should concern every taxpayer regardless of party. A $600 million cost overrun on a renovation project is not a rounding error. It is the kind of institutional spending drift that erodes public trust in government competence.
The Justice Department's decision to close the criminal track does not mean the answers have arrived. It means the investigation has changed hands. Whether the Fed inspector general produces the "comprehensive report in short order" that Pirro expects remains to be seen.
The episode also raises questions about the use of criminal probes as leverage in Washington's confirmation battles. Tillis openly conditioned his vote on the probe's resolution, and the probe's closure now conveniently unlocks the confirmation path. That sequence, not unlike internal tensions that have surfaced in other major federal investigations, invites scrutiny about whether the timeline served justice or politics.
Warsh's confirmation hearing has already taken place. With Tillis's objection resolved, the Banking Committee can move forward. If the panel approves Warsh, a full Senate vote follows.
Meanwhile, the Fed inspector general's inquiry has no publicly announced timeline or scope. Pirro said she expects results "in short order," but that phrase carries no binding deadline. The IG's findings could vindicate Powell, reveal deeper problems, or land somewhere in between.
The Justice Department has a mixed record when it comes to high-profile investigations that begin with intensity and end with a referral or a quiet close. The settlement of the Michael Flynn case after years of politically charged prosecution is one example. The subpoenaing of James Comey over the 2017 Russia intelligence assessment is another thread in the same fabric.
In each case, the public is left to judge whether the system worked or whether the process was the punishment, and whether the resolution served accountability or convenience.
The criminal probe is closed. The questions are not. The Fed spent hundreds of millions more than it told Congress it would, and the man who oversaw that spending is walking away from the chairmanship without a criminal finding against him, but also without a clean bill of health.
Pirro's warning that she could reopen the case is not just boilerplate. It is a marker. And the inspector general now holds the responsibility to deliver answers that prosecutors decided not to pursue through the criminal system.
Taxpayers who funded that $2.5 billion renovation deserve more than a referral and a promise. They deserve a full accounting, and if the IG cannot deliver one, the question of why the criminal probe was closed will only grow louder.
Washington has a long habit of investigating loudly and resolving quietly. The people who pay the bills notice.
