DOJ Ends Probe of Fed Chair Powell, Refers Renovation Inquiry to Fed Inspector General — Clearing Path for Warsh

The Justice Department has closed its criminal investigation into Federal Reserve Chair Jerome Powell, U.S. Attorney Jeanine Pirro announced on Friday, removing a major obstacle to the Senate confirmation of Kevin Warsh as Fed chair.

Probe Transferred to Inspector General

Pirro, the top federal prosecutor in Washington, D.C. and a close ally of President Trump, said she asked the Federal Reserve’s Office of Inspector General (IG) to take over scrutiny of cost overruns related to the renovation of the Fed’s Washington headquarters. The IG had already been examining the project after Powell requested a review.

"The IG has the authority to hold the Federal Reserve accountable to American taxpayers," Pirro wrote on social media. "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."

Judicial Rebuke and Political Fallout

The DOJ inquiry, which examined renovation spending and Powell’s statements to Congress about the project, had been sharply criticized by a federal judge. Chief U.S. District Judge James Boasberg last month barred subpoenas to the Fed’s Board of Governors, finding they appeared intended to pressure Powell amid public calls from the White House for lower interest rates. Boasberg said prosecutors presented "essentially zero evidence" that Powell committed a crime.

The investigation also prompted tangible political consequences: Senator Thom Tillis (R-N.C.), a member of the Senate Banking Committee, withheld his support for Warsh’s confirmation until the DOJ closed the probe. Tillis indicated during Warsh’s confirmation hearing that he would back the nominee if the investigation was dropped.

FILE PHOTO: A worker walks at the construction site of the Federal Reserve headquarters, after U.S. President Donald Trump renewed his threat to bring a lawsuit against Federal Reserve Chair Jerome Powell over Powell's management of renovations of the building, in Washington, D.C., U.S., January 12, 2026. REUTERS/Kevin Lamarque/File Photo

Next Steps and Oversight

Tim Scott, chair of the Senate Banking Committee, said he would ask the inspector general to brief the committee within 90 days on its findings. A spokesperson for the inspector general confirmed the office has been reviewing the renovation project since July 2025 and is examining "substantial cost increases and overruns." The IG has previously issued two audits related to the renovations — one in March 2021 recommending project-management improvements and another in February 2022 finding modifications to the project were "generally effective."

Powell has said he will not leave the Fed Board "until the investigation is well and truly over, with transparency and finality." Pirro left open the possibility of reopening the DOJ investigation depending on the IG's conclusions.

Costs and Context

The Fed’s current budget for overhauling two buildings is $2.46 billion, about $1.1 billion higher than the 2020 allocation; most of the increase is attributed to rising material and labor costs after the post-pandemic surge in inflation, according to Federal Reserve budget documents.

President Trump, who has publicly pressured Powell to lower interest rates and has sharply criticized him, had supported the renovation inquiry. In his ruling blocking subpoenas, Judge Boasberg noted the President’s repeated public attacks on Powell.

Implications: With the DOJ probe closed and the IG review underway, the procedural barrier to Kevin Warsh’s Senate confirmation has been removed, though the IG’s findings — and Powell’s decision about his Board seat — could still influence the timeline and outcome.