DOJ drops criminal probe of Fed Chair Jerome Powell

But the federal criminal probe into Powell and the Fed, brought by a staunch ally of President Donald Trump, was widely seen as part of the president's pressure campaign against Powell and the central bank as he repeatedly pushed for lower interest rates. That intensified fears on Wall Street, among Democrats, and even among some Republicans about the central bank's independence, imperiling Warsh's path to confirmation to succeed Powell when his term as chair ends next mont.

White House spokesman Kush Desai said in a statement that the inspector general's office was better positioned to investigate the matter. "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," Desai said.

The Fed didn't commend on Pirro's announcement.

With the investigation closed, Warsh's path through the Senate has reopened. Sen. Thom Tillis, the North Carolina Republican who had been holding up committee action on the nomination, had conditioned his cooperation on the DOJ's withdrawal of the Powell probe. Tillis holds a tie-breaking vote on the evenly divided 24-member panel, and without his support, Warsh could not secure the committee majority needed to move forward to a full Senate confirmation vote.

Two prior inspector general reviews of the renovation had each come back clean, yet Powell nonetheless requested a third look in 2025 as the Trump administration kept up its attacks on the project. Critics of the investigation, including Powell himself, argued it was never truly about construction costs — rather, it was a vehicle for pushing the central bank to cut interest rates.

The investigation had already suffered a significant legal setback before Friday's announcement. A federal judge had quashed grand jury subpoenas that Pirro's office issued to the Fed, finding the case was driven by a desire to pressure Powell into yielding to the president or resigning. As recently as Wednesday, Pirro had publicly insisted she intended to press forward, even after the subpoena ruling dealt her investigation a serious blow.

Powell's term as Fed chair ends May 15. Warsh told senators at his confirmation hearing that he would act as "an independent actor" and that Trump had never asked him to commit to any particular interest rate decision.

Trump's DOJ drops its criminal probe of Fed Chair Jerome Powell

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