DOJ drops Powell probe, clears way for Warsh as Fed chairman

The Justice Department on Friday dropped its criminal investigation into Federal Reserve Chairman Jerome Powell. This removes a major obstacle to the Senate confirmation of President Donald Trump’s nominee for Fed Chairman Kevin Warsh, a development with possible consequences for interest rates and the housing market.

American lawyer Jeanine Pirro announced on X that she close the investigation and refer the matter to the Fed’s inspector general to investigate cost overruns in the multibillion-dollar renovation of the central bank’s headquarters in Washington.

Senator Thom Tillis, R-N.C. had blocked a full Senate vote on Warsh’s confirmation until the investigation ended. The White House said it “remains as confident as before that the Senate will quickly confirm Kevin Warsh.”

Pirro said she “will not hesitate to resume a criminal investigation if the facts warrant it.”

The Justice Department’s move comes amid a longstanding conflict between the Trump administration and the Fed. Last year, for example, Trump suggested he could remove Powelland moreover referred including the chairman of the Fed as a ‘big loser’.

Bill Pulte, director of the Federal Housing Finance Agency, has also frequently criticized Powell and accused the Fed chairman of engaging in a cover-up.

Criticism has often focused on a $2.5 billion renovation of the Fed’s headquarters in Washington, DC. The Trump administration believes the project was mismanaged and that Powell lied to Congress about it. However, Trump’s critics have argued that the project is just a pretext and that the president’s criticism is political. The Fed itself has also pushed back against Trump’s accusations.

Meanwhile, against the backdrop of domestic and foreign economic uncertainty, the Fed has resisted pressure to cut rates – something Trump has repeatedly urged.

In January Trump nominated Kevin Warsh succeeds Powell.

Email Jessi Healey