DOJ Drops Powell Probe
- The Justice Department ended its criminal investigation into Federal Reserve Chair Jerome Powell on April 24, shifting scrutiny over Fed building-renovation cost overruns to the central bank’s inspector general instead. - Bloomberg reported the move could unblock Kevin Warsh, President Donald Trump’s nominee to replace Powell as Fed chair, after Senator Thom Tillis said he would oppose confirmation while the probe continued. - Powell’s chair term ends May 15, but he can remain a governor until 2028, leaving the Fed succession fight unresolved. (bloomberg.com)
The Justice Department dropped its criminal probe of Federal Reserve Chair Jerome Powell on April 24 and sent the matter back to the Fed’s inspector general. (bloomberg.com) The investigation had focused on cost overruns in a multiyear renovation of historic Federal Reserve buildings in Washington. Bloomberg reported US Attorney Jeanine Pirro said she expected the Fed’s Office of Inspector General to review the overruns and issue findings. (bloomberg.com) Powell had disclosed on January 11 that the Justice Department served the Fed with grand jury subpoenas and threatened a criminal indictment tied to his Senate testimony about the renovation project. He said the pressure was really about interest-rate policy, not construction. (federalreserve.gov) The timing matters because President Donald Trump has nominated former Fed governor Kevin Warsh to succeed Powell as chair when Powell’s term expires on May 15. Warsh’s confirmation hearing was held on April 21. (bloomberg.com) A key obstacle was Senator Thom Tillis of North Carolina, who said he would block Warsh while the Powell probe remained open. Bloomberg reported the Justice Department’s move could satisfy Tillis and smooth Warsh’s path through the Senate. (bloomberg.com 1) (bloomberg.com 2) That still does not guarantee Powell will leave the Federal Reserve in May. Bloomberg reported Powell had said he would stay until the matter was resolved “with transparency and finality,” and Pirro also warned she could reopen a criminal case if new facts emerged. (bloomberg.com) Powell’s term as chair ends May 15, but his separate term as a member of the Fed’s Board of Governors runs into 2028. That means he could remain inside the central bank even after a new chair is confirmed. (bloomberg.com 1) (bloomberg.com 2) Critics have argued the probe was part of a broader White House campaign to pressure the Fed to cut interest rates. Elizabeth Warren said on April 24 that dropping the Powell case did not end what she called Trump’s effort to take over the central bank, because another probe involving Governor Lisa Cook was still active. (bloomberg.com) So the legal cloud over Powell has thinned, but the fight over who runs the Fed after May 15 is still not settled. The next test is whether Senate Republicans now move Warsh’s nomination forward. (bloomberg.com 1) (bloomberg.com 2)
