The Justice Department announced that it is ending its criminal investigation into Federal Reserve Chairman Jerome Powell, removing a significant hurdle for the confirmation of President Trump’s nominee, Kevin Warsh, as head of the Federal Reserve Board of Governors. U.S. Attorney Jeanine Pirro disclosed the decision on April 24, 2026, stating that the Fed’s Office of the Inspector General (OIG) will take over the inquiry related to potential cost overruns in the central bank’s Washington, D.C., headquarters renovation.
In a message posted on the social media platform X, Pirro said, “I have directed my office to close our investigation as the IG undertakes this inquiry.” She also emphasized that a criminal probe could be restarted if warranted by future findings. The inspector general’s office is expected to provide a comprehensive report to the Justice Department once its review is completed.
Fed Inspector General’s Review of Renovation Project
The ongoing renovation of the Federal Reserve headquarters, approved in 2017 and projected to finish in 2027, has seen costs rise from an initial $1.9 billion estimate to nearly $2.5 billion. The Fed attributes the increases to changes in designs, rising costs for materials and labor, and unforeseen issues such as soil contamination and asbestos discovery.
The Fed’s inspector general, Michael Horowitz, who previously held a senior oversight role at the Justice Department, has been conducting an independent evaluation of the renovation project since July 2025. The OIG has issued statements noting its active efforts to complete the review and has pledged to make its findings available publicly and to Congress.
Impact on Confirmation of Kevin Warsh
Pirro’s announcement clears a key political obstacle for Kevin Warsh, President Trump’s nominee to succeed Powell as Fed chairman. Warsh’s confirmation was delayed due to concerns raised by Republican Senator Thom Tillis, who opposed advancing any Fed nominee amid the ongoing investigation into Powell. Warsh testified before the Senate Banking Committee on April 22, 2026, assuring lawmakers of the Fed’s continued independence in monetary policy decisions.
Powell’s term as Fed chairman is set to expire in May 2026. Although nominated by President Trump in 2018 and reappointed by President Biden in 2022, Powell faced criticism from Trump over interest rate policies and the renovation project’s escalating costs. The probe emerged publicly in January 2026 when Powell disclosed the Fed had received grand jury subpoenas connected to his congressional testimony about the renovation expenditures.
Legal Proceedings and Political Context
The investigation took a significant legal turn in March when U.S. District Judge James Boasberg quashed subpoenas related to Powell, describing them as attempts to pressure him on monetary policy decisions. The Justice Department unsuccessfully sought to have this ruling reconsidered. Despite earlier statements affirming the investigation’s continuation, Pirro’s latest decision to close the probe indicates an abrupt shift away from criminal charges against Powell.
The inquiry also included an instance in which federal prosecutors attempted unannounced entry to the Fed’s headquarters renovation site but were denied access and directed to work with the Fed’s legal counsel.
Why it matters
This development affects the Federal Reserve’s leadership transition and alleviates political tension surrounding the nomination of Kevin Warsh. It also channels scrutiny of the Fed’s substantial renovation costs from criminal investigators to internal oversight, which may result in more transparent accounting and accountability for public funds used in central bank operations.
Background
The Federal Reserve is self-funded and does not rely on taxpayer money, but the costly renovation project has drawn scrutiny amid rising inflation and economic uncertainty. Powell has requested multiple audits of the renovation, and this internal oversight reflects ongoing attempts to address congressional and public concerns over fiscal management at the central bank. The investigation into Powell occurred against a backdrop of President Trump’s sharp criticism of the Federal Reserve’s interest rate policies.
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