Justice Department drops criminal probe into Fed Chair Jerome Powell

WASHINGTON (CN) — The Department of Justice announced on Friday it was ending its criminal probe into Federal Reserve Chair Jerome Powell over the central bank's $2.5 billion renovation project.

U.S. Attorney for the District of Columbia Jeanine Pirro indicated the Fed's Inspector General Michael Horowitz would look into the matter instead.

Pirro wrote in a post on X, "Accordingly, I have directed my office to close our investigation as the IG undertakes this inquiry. Note well, however, that I will not hesitate to restart a criminal investigation should the facts warrant doing so."

"The IG has the authority to hold the Federal Reserve accountable to American taxpayers," Pirro said. "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."

The Justice Department struggled to advance its investigation — which was criticized as part of President Donald Trump's larger pressure campaign against the Fed to lower interest rates, most recently by Chief U.S. District Judge James Boasberg.

On March 13, the Barack Obama appointee blocked Pirro's effort to subpoena the Federal Reserve Board of Governors and Powell, finding the government's primary if not sole purpose was to "harass and pressure" the chairman.

In an opinion granting the Board of Governors' motion to quash the two subpoenas, Boasberg noted there was a "mountain of evidence" suggesting they were meant to push Powell into lowering rates or resigning himself. On the other side, Boasberg wrote, the government offered no evidence that "Powell committed any crime other than displeasing the president."

Pirro's decision to walk away from the probe may clear the way for Trump's nominee to replace Powell, Kevin Warsh, as chair when his term ends May 15. Powell will continue serving as a member of the Board of Governors through 2028.

North Carolina Senator Thom Tillis, a Republican, had vowed to withhold his support for Warsh's nomination as long as the investigation remained open.

It is unclear whether Friday's announcement changes his position.

The Justice Department opened the criminal investigation into Powell on Jan. 11, over his testimony before the Senate Banking Committee last June about the Fed's $2.5 billion renovation of two office buildings.

The Federal Reserve revealed the existence of the probe in a video on X, in which Powell urged Americans to consider the unprecedented investigation "in the broader context of the administration's threats and ongoing pressure" against him and the Fed. He slammed as a pretext the assertion the investigation was focused on his testimony or the renovation.

Trump has criticized the project as excessive, although after a publicized tour with Powell on July 24, 2025, the president largely stopped commenting on the renovation's price tag. In an interview with NBC News on Jan. 11, Trump insisted he had no prior knowledge of the DOJ investigation.

"I don't know anything about it, but he's certainly not very good at the Fed, and he's not very good at building buildings," Trump said.