DOJ drops investigation of Fed Chair Powell, lifts hurdle to Warsh

The Department of Justice on Friday dropped its criminal investigation of Federal Reserve Chair Jerome Powell, removing a major hurdle to the Senate confirming President Donald Trump‘s nomination of Kevin Warsh to replace him.

U.S. Attorney Jeanine Pirro, the top federal prosecutor in the District of Columbia, said she was abandoning the probe in a post on X, which came three days after Warsh testified before the Senate Banking Committee on his nomination.

Pirro had said just Wednesday that she was committed to continuing the criminal probe, which had been crippled by a federal judge’s ruling quashing subpoenas her office issued to the Fed.

Sen. Thom Tillis, a North Carolina Republican and Banking Committee member, had an effective hold on the full Senate from voting to confirm Warsh as Fed chair unless the criminal investigation ended.

Pirro, in her announcement dropping the probe, said that instead of her office, the Federal Reserve’s inspector general “has been asked this morning” to investigate cost overruns in the multi-billion-dollar renovation of the central bank’s headquarters in Washington.

She has claimed the renovation — which the Fed IG has been investigating since last summer — and Powell’s testimony about the project to the Banking Committee was her reason for investigating the Fed chief.

Powell and others had said that the real reason for Pirro’s probe was to pressure him and the Fed to lower interest rates as Trump wanted.

Powell had asked the inspector general in July 2025 to review the renovation project after Trump criticized its cost.

He noted at the time that the IG conducted an audit in 2021 to assess the Fed Board’s “process for planning and managing multiple renovation projects as well as procuring services under various renovation-related contracts.”

An IG spokesperson in a statement to CNBC on Friday said the IG is “actively working to complete” an “evaluation of the Board’s building renovation project,” and that it would make the results of that investigation available to the public and Congress when it is done.

Pirro in her X post said, “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 said.

“Accordingly, I have directed my office to close our investigation as the IG undertakes this inquiry,” Pirro said.

“Note well, however, that I will not hesitate to restart a criminal investigation should the facts warrant doing so.”