Full Breakdown
Justice Department Ends Probe of Fed Chair Jerome Powell, Paving Way for Kevin Warsh’s Confirmation
4/25/2026, 9:06:45 AM
The Investigation’s Closure
On 24 April 2026 the U.S. Department of Justice announced that it is closing its criminal investigation into Federal Reserve Chair Jerome Powell. U.S. Attorney Jeanine Pirro said her office will transfer the matter to the Fed’s Office of Inspector General (OIG), ending a probe that had blocked Senate action on President Donald Trump’s nominee, former governor Kevin Warsh.
Background & Context
The inquiry centered on alleged cost overruns in a multibillion-dollar renovation of the Fed’s Washington headquarters. Powell had asked the Fed’s OIG to review the project in 2025; the DOJ’s probe began in January 2026 and was widely viewed as an effort to pressure the central bank to cut interest rates, a demand repeatedly voiced by Trump. A federal judge quashed DOJ subpoenas in March, ruling they were issued “for the improper purpose of pressuring Powell to lower rates or resign.”
Key Figures & Groups
- Jerome Powell – Fed Chair, term ends 15 May 2026.
- Kevin Warsh – Former Fed governor, Trump’s nominee for chair.
- Jeanine Pirro – U.S. Attorney for the District of Columbia, DOJ lead on the probe.
- President Donald Trump – Has publicly urged the Fed to slash rates.
- Sen. Thom Tillis (R-NC) – Senate Banking Committee member who blocked Warsh’s confirmation until the probe ended.
- Sen. Elizabeth Warren (D-MA) – Ranking Democrat on the committee, vocal critic of the nomination.
- Chief Judge James Boasberg – D.C. District Court judge who dismissed the subpoenas.
- Kush Desai – White House spokesperson on the decision.
- Tim Scott (R-SC) – Senate Banking Committee chair.
Timeline of Key Events
- January 2026 – DOJ launches criminal investigation of Powell over renovation costs.
- March 2026 – Judge Boasberg quashes subpoenas, citing “essentially zero evidence.”
- 21 April 2026 – Warsh testifies before the Senate Banking Committee; Tillis signals he will not support the nomination while the probe remains.
- 24 April 2026 – Pirro announces closure of the DOJ investigation and transfer to the Fed OIG.
- 15 May 2026 – Powell’s term as chair expires; Warsh’s confirmation is expected shortly thereafter.
Data & Statistics
- Renovation budget: $2.5 billion, roughly $1.1 billion above the 2020 allocation.
- The Fed’s OIG has already completed two audits (2021, 2022) finding “generally effective” project-management practices.
- Market-watch tools (CME FedWatch, Kalshi prediction market) show a high probability of a Warsh confirmation before the end of May.
Why It Matters
The probe’s termination removes the primary procedural obstacle to installing a Trump-aligned Fed chair, raising concerns about the central bank’s independence. A more hawkish Warsh could keep the federal funds rate near 3.5-3.75 %, influencing mortgage, auto-loan, and business-credit costs. Financial-market participants, including cryptocurrency traders, are monitoring the outcome for potential shifts in liquidity and risk appetite.
Official Statements & Responses
Pirro emphasized the OIG’s authority to “hold the Federal Reserve accountable to American taxpayers” and pledged a “comprehensive report.” The White House, via Desai, called the move a step toward “swiftly confirming” Warsh. Senate Banking Committee chair Tim Scott announced plans to request an OIG briefing within 90 days. The Fed declined comment on the investigation’s closure. Tillis reiterated his willingness to support Warsh once the DOJ ends the probe.
Criticism & Opposition
Democrats, led by Warren, labeled Warsh a “sock puppet” and described the DOJ’s action as an attempt to “clear the path for Senate Republicans to install President Trump’s sock puppet.” Tillis, while eventually supportive, had previously called the investigation “baseless.” Several Republican senators expressed concern that ending the probe could set a precedent for political interference in monetary policy.
Conflicting Reports & Gaps
Sources differ on the probe’s characterization: the DOJ framed it as a legitimate oversight of taxpayer-funded construction, whereas critics called it “bogus” and “thin and unsubstantiated.” Pirro warned she could “restart a criminal investigation should the facts warrant,” leaving the possibility of future legal action unresolved.
Verbatim Quotes
- “The IG has the authority to hold the Federal Reserve accountable to American taxpayers.” — Jeanine Pirro, U.S. Attorney
- “essentially zero evidence” to suspect a crime. — Judge James Boasberg, U.S. District Court
- “The president never once asked me to commit to any particular interest rate decision, period,” — Kevin Warsh, Senate Banking Committee nominee
- “I will not hesitate to restart a criminal investigation should the facts warrant doing so.” — Jeanine Pirro, X post
What’s Next
The Senate Banking Committee is expected to schedule a confirmation vote within weeks. Powell has indicated he will remain on the Board of Governors until the investigation is “truly over.” The Fed OIG’s forthcoming report may shape congressional oversight and could influence the broader debate over central-bank independence.
