Federal Reserve Chairman Jerome Powell speaks during a press conference after the Federal Reserve Board’s Federal Open Market Committee meeting on October 29, 2025 in Washington, DC.
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The Justice Department on Friday dropped a criminal investigation into Federal Reserve Chairman Jerome Powell, removing a major hurdle to the Senate’s confirmation of Kevin Warsh’s nomination to replace President Donald Trump.
Jeanine Pirro, the top federal prosecutor for the District of Columbia, announced her decision to abandon the Powell investigation in a post about X three days after Warsh testified about his nomination before the Senate Banking Committee.
Pirro said the Federal Reserve’s inspector general will investigate cost overruns in the multibillion-dollar renovation of the central bank’s headquarters in Washington. She had argued that the renovation work was the reason for investigating Mr. Powell.
They said the real reason for Mr. Pirro’s investigation was to pressure Mr. Powell and the Fed to lower interest rates in line with President Trump’s wishes.
Mr. Pirro had just announced on Wednesday that he would continue his investigation after a federal judge’s ruling rescinding a subpoena his office had issued to the Fed made it impossible.
Sen. Thom Tillis, R-North Carolina, on the Banking Committee, had effectively held off a full Senate vote on Warsh’s nomination until the criminal investigation was completed.
Federal Reserve Board Chair candidate Kevin Warsh arrives for his confirmation hearing before the Senate Banking, Housing and Urban Affairs Committee in the Dirksen Building on April 21, 2026.
Tom Williams | Cq-roll Call Inc. | Getty Images
“The IG has the authority to hold the Federal Reserve accountable to American taxpayers,” Pirro said in an X post Friday.
“I look forward to a comprehensive report soon and am confident that its findings will help this agency fully resolve the questions that led it to issue the subpoena,” she said.
“Accordingly, I have directed my office to close the investigation as the IG conducts this investigation,” Pirro said.
“However, please note that I will not hesitate to reopen a criminal investigation if the facts warrant it.”
“America’s taxpayers deserve answers for the Federal Reserve’s fiscal mismanagement, and the more powerful authorities in the Office of Inspector General are best positioned to get to the bottom of the matter,” White House Press Secretary Khush Desai said in a statement.
“The White House remains confident as ever that the Senate will quickly confirm Kevin Warsh as the next Fed Chair, ultimately restoring competency and confidence in the Fed’s decision-making,” Desai said.
The Fed declined to comment.
CNBC has reached out to Pirro’s office, Warsh, Tillis, Senate Banking Committee Chairman Tim Scott, R.S.C., and other members of the committee for comment.
Earlier this week, Scott, R.S.C., advocated closing the criminal investigation and referring the matter to Congress.
In an interview with CNBC, Scott said a switch in the investigation was essential to confirming Warsh as chair, after which information related to the project would become available.
Mr. Scott proposed working with the House Financial Services Committee to “establish a commission with permanent oversight of construction projects within the jurisdiction of the Banking Committee.”
“Wherever that leads us, we should go. If that leads to criminal charges, so be it,” Scott said. “But give Kevin Warsh at the Fed access to all the information he needs.
Scott also said he believes Powell is “not incompetent and not a criminal.”
Sen. Elizabeth Warren (Massachusetts), the top Democrat on the Banking Committee, said abandoning the Powell investigation is “nothing more than an attempt by Senate Republicans to clear the way for President Trump’s puppet Kevin Warsh to become Fed Chairman.”
“Let me be clear about what the Department of Justice announced today: Instead of dropping its ridiculous criminal investigation against Governor Lisa Cook, it has threatened to reopen a bogus criminal investigation against Fed Chairman Jerome Powell at any time,” Warren said.
Last summer, President Trump called for Cook, who like Powell had resisted calls for rate cuts, to be fired after administration officials claimed he had made false statements on mortgage applications.
Mr. Cook denied these allegations and filed a lawsuit seeking an injunction against his dismissal. She remained on the Fed board while the Supreme Court considered her case.
“Anyone who believes Donald Trump’s corrupt plan to take over the Fed is over is fooling themselves,” Warren said. “The Senate should not move forward with Kevin Warsh’s nomination.”
—CNBC’s Jeff Cox, Kevin Breuninger, Matt Peterson and Emily Wilkins contributed to this article.
