US Justice Department Ends Probe into Fed Chair Jerome Powell Amid Political Tensions

The US Justice Department has officially ended its criminal investigation into Federal Reserve Chairman Jerome Powell concerning alleged cost overruns on Fed building renovations. Instead, an internal probe led by the Fed’s inspector general will take over the inquiry.

This development comes amid ongoing political friction between Powell and former President Donald Trump, who criticized the renovation expenses and repeatedly pressured Powell to lower interest rates. The Senate is now focused on confirming Trump’s nominee, Kevin Warsh, to succeed Powell.

Why the Investigation Was Dropped and What’s Next

US Attorney Jeanine Pirro announced the Justice Department’s decision to halt the criminal probe, emphasizing that the Federal Reserve’s inspector general is better equipped to handle the matter. Pirro also warned that the investigation could be reopened if new evidence emerges.

"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.",—White House spokesman Kush Desai

The White House remains optimistic that the Senate will quickly confirm Kevin Warsh as the next Fed Chair, aiming to restore confidence and competence in the central bank’s leadership.

The Political Backdrop: Trump vs. Powell

The probe into Powell’s handling of renovation costs was widely seen as part of a broader feud with former President Trump. Trump repeatedly criticized Powell for not lowering interest rates, calling him a “knucklehead” and threatening to fire him if he did not step down.

Powell publicly condemned the investigation as "unprecedented," warning that political interference could undermine the Federal Reserve’s independence in setting monetary policy based on economic data rather than political pressure.

The Renovation Controversy: What’s at Stake?

The renovations in question involve the historic Eccles Building and the 1951 Constitution Avenue building, both dating back to the 1930s. The overhaul includes asbestos and lead removal and modernization efforts, with costs rising to an estimated $3.1 billion—higher than the Fed’s original $2.5 billion forecast.

While Trump criticized the ballooning expenses, the Fed argues that the renovations will ultimately reduce long-term costs and improve safety and efficiency.

Looking Ahead: Senate Confirmation and Fed’s Future

Powell’s term officially ends on May 15, but he plans to stay until his successor is confirmed. The Senate’s decision on Kevin Warsh’s nomination will be pivotal in shaping the Fed’s direction amid economic uncertainties.

With the Justice Department stepping back from criminal charges, the focus shifts to the internal investigation and the broader implications for the Fed’s independence and fiscal management.