The Department of Justice has officially closed its criminal investigation into Federal Reserve Chair Jerome Powell and the central bank regarding a multi-billion-dollar renovation project at the Fed's Washington headquarters, according to announcements from U.S. Attorney for the District of Columbia Jeanine Pirro on Friday [1][2][3]. Pirro stated that the Inspector General (IG) for the Federal Reserve has been tasked with scrutinizing the building cost overruns, which have reached into the billions of dollars and have been borne by taxpayers [1][2][3]. She emphasized that the IG has the authority to hold the Federal Reserve accountable and expects a comprehensive report soon, adding that her office would not hesitate to restart a criminal investigation if warranted by the facts [1][2][3].
The probe, which centered on the renovation of two historic Fed buildings that had not been comprehensively renovated since the 1930s, was initially triggered by cost overruns. The Federal Reserve originally estimated the project at $1.9 billion, but the cost later rose to approximately $2.5 billion due to unforeseen changes, increased costs of materials, equipment, labor, more asbestos than expected, and the discovery of a sinkhole [2]. The IG has previously reviewed the project twice and found no wrongdoing, but was asked to review it again in 2025 by Powell amid ongoing political pressure from President Donald Trump and his allies [2].
The closure of the DOJ investigation removes a significant obstacle to the Senate confirmation of Kevin Warsh, President Trump's nominee to replace Powell as Fed Chair [2][3]. Sen. Thom Tillis (R-N.C.), a member of the Senate Banking Committee, had blocked Warsh's confirmation vote due to the ongoing investigation, which he called a "bogus" probe of Powell [1][2][3]. Tillis and other lawmakers have stated there was no evidence Powell committed any crime [2]. White House spokesman Kush Desai expressed confidence that Warsh would now be swiftly confirmed, stating that the IG's more powerful authorities are best positioned to address concerns about the Fed's fiscal management [2][3].
The Federal Reserve declined to comment on the closure of the investigation [2][3]. Meanwhile, Sen. Tim Scott (R-S.C.), chairman of the Senate Banking Committee, advocated for ending the criminal probe and suggested that Congress establish permanent oversight of such construction projects [3]. The announcement follows a period of heightened tension between Trump and Powell, with Trump repeatedly criticizing Powell over interest rate policy and accusing him of mismanagement [1][2].
CONCLUSION
The DOJ's decision to close its criminal investigation into Jerome Powell and the Federal Reserve over building cost overruns clears the way for Kevin Warsh's Senate confirmation as Fed Chair. With the Inspector General now leading the inquiry, political and market uncertainty around Fed leadership is expected to ease, though oversight of the renovation project will continue.