DOJ probe – The Justice Department will close a criminal investigation of Fed Chair Jerome Powell and route cost-overrun concerns to the Fed’s inspector general, clearing the way for a Senate vote on his successor.
The Department of Justice has moved to end a criminal investigation involving Federal Reserve Chair Jerome Powell, a turn that could reshape the politics around who leads the central bank next month.
The DOJ’s decision follows intense pressure from senators who argued the probe risked becoming a political obstacle to confirming Powell’s successor.. District of Columbia U.S.. Attorney Jeanine Pirro said the investigation is being closed while the Federal Reserve’s inspector general prepares a fresh look at alleged cost overruns connected to renovations at the Fed’s Washington headquarters.
Pirro said senior DOJ officials have been in contact with senators, including Republican Sen.. Thom Tillis. who sits on the Senate Banking Committee and has been central to efforts to keep the probe tied up until it is dropped.. The plan. Misryoum understands. is to refer the issue to the inspector general rather than pursue criminal subpoenas or inquiries through the courts.. Pirro also said her office will not hesitate to restart a criminal investigation if new facts warrant it.
The matter centers on the Fed’s renovation project—an expensive overhaul that has drawn scrutiny over whether costs were managed responsibly.. The Fed’s independent inspector general previously audited the building renovation costs in 2021.. Pirro said the inspector general has now been asked to scrutinize the overruns again. and she expects a comprehensive report soon.. Powell has also indicated that the watchdog should review the project again, according to Misryoum.
Why this matters goes beyond one investigation.. When the Justice Department takes on matters involving the Federal Reserve, it touches a core U.S.. political debate: how much the government should be able to reach into an institution designed to operate with independence.. Senators opposed to the DOJ probe have framed the move as necessary to protect the Fed’s credibility. while the administration’s allies have argued taxpayers deserve answers about “fiscal mismanagement.” Either way. the central question quickly becomes whether legal process is being used as leverage—especially with leadership change imminent.
Powell’s term is set to end next month. but he has said he will stay in the role until President Donald Trump’s pick to lead the Fed is confirmed.. That nominee, Kevin Warsh, would need to pass through the Senate Banking Committee and ultimately the full Senate.. The DOJ’s decision is expected to remove a major blocking point that Tillis has insisted on—namely that he would not advance Warsh while the criminal probe remains active.
Tillis has been explicit that his position is tied to the investigation.. Misryoum notes that he previously said he would oppose advancing any Fed nominee until the “legal matter” is resolved. arguing the probe is “bogus.” When the case moved through the courts. a D.C.. judge tossed out subpoenas associated with the inquiry. and prosecutors faced the prospect of delay if they continued fighting the ruling.. Tillis publicly warned that appealing decisions—or continuing the probe—could stall Warsh’s confirmation.
The new direction now places the focus on oversight rather than prosecution.. The inspector general review is not the same as a criminal case. and it is likely to be approached through audits. documentation. and internal compliance rather than courtroom battles over evidence and subpoenas.. Still. the human and political consequences are immediate: lawmakers have been signaling that Warsh cannot move forward without a clear end to the DOJ effort.
A key detail in Pirro’s statement is also a warning: the investigation can restart if facts warrant it.. That means the inspector general report could become a new pivot point.. If the review turns up serious issues. pressure could build again—this time around whether the findings justify additional action by investigators.. Conversely. if the report provides a defensible explanation for cost changes. it may help senators close ranks around confirmation and reduce the incentives for further delay.
For the Federal Reserve, the stakes are about more than leadership.. The Fed’s independence is not just a legal concept; it’s a market signal.. Investors, businesses, and households read Fed credibility into everything from inflation expectations to interest-rate planning.. If the confirmation process drags on or looks entangled with enforcement politics. it can create uncertainty—one Misryoum expects could reverberate well beyond Washington.
With the DOJ probe slated to end and the inspector general review underway. the next phase likely hinges on procedural timing in the Senate Banking Committee and the full chamber.. Tillis previously said he supports Warsh but would block advancement until the DOJ’s probe is dropped.. If that condition is satisfied in practice—and if senators view the inspector general process as sufficient—Warsh could face a smoother path to confirmation.
In the meantime, the episode underscores a broader pattern in U.S.. governance: oversight disputes can become confirmation disputes, and confirmation disputes can become institutional confidence tests.. Misryoum will be watching how quickly the inspector general report lands. and whether senators treat it as closure—or as the beginning of a new round of scrutiny.