Jeanine Pirro drops criminal probe of Jerome Powell

By Lucy Bayly, David Goldman, CNN

(CNN) — The Trump administration’s extraordinary criminal investigation of Federal Reserve Chair Jerome Powell is over, removing significant uncertainty that had been clouding the future of the world’s most important central bank.

Jeanine Pirro, the US Attorney for the District of Columbia, announced on X Friday she is closing the probe. In the investigation’s place, the Fed’s inspector general has agreed to scrutinize the significant cost overruns at the central bank’s ongoing multibillion-dollar renovation project at its Washington, DC, headquarters.

After the inspector general completes his report, Pirro said her office will review it and could restart its criminal probe if warranted.

In the meantime, the end of the investigation clears the way for Kevin Warsh, President Donald Trump’s pick to succeed Powell, to get confirmed for the role. Powell’s term helming the central bank is set to expire on May 15, and Warsh appeared before the Senate Banking Committee for a confirmation hearing earlier this week.

One key senator on the committee had vowed to block the vote unless the DOJ dropped the investigation into Powell.

The investigation

The Department of Justice launched a criminal investigation into the Fed chair in January after Trump spent months railing against Powell for not lowering interest rates faster. Trump’s complaints included accusations of impropriety and incompetence in Powell’s leadership of the renovation.

A federal prosecutor in Washington, DC, told a judge last month that his office didn’t have evidence of any crimes, but Pirro continued the probe and Trump said he supported the investigation.

The investigation, which Powell in January strongly rebuked as politicized, has been fraught from the start. Pirro’s subpoenas took the White House by surprise and cast a shadow over Warsh’s nomination chances. A federal judge last month quashed the Justice Department’s subpoenas, a decision that Pirro said she planned to appeal.

The DOJ probe stoked fears that the Trump administration was trying to chip away at the Fed’s independence, which would pave the way for political interference in setting interest rates for the world’s largest economy.

Republican Senator Thom Tillis, who sits on the banking committee that approves Fed nominees, has been blocking a vote for Warsh because of the probe, which he described as “frivolous.” Once the probe ended he said, he would vote to confirm Warsh.

Tillis did not immediately respond to CNN’s request for comment on the end of the investigation.

The move to abandon the criminal probe comes after weeks of private pleas from Senate Republicans that grew increasingly public.

‘Then I’ll have to fire him’

The probe imperiled both Warsh’s nomination and Powell’s tenure at the Fed, throwing the future leadership of America’s central bank into doubt.

Powell had said that if a replacement hadn’t been named by the end of his term on May 15, Powell would remain as Fed chair “pro tem” in the interim.

That was unsatisfactory to Trump, who has wanted to oust Powell for years. Trump believes that a new Fed chair will lower interest rates, and joked that he would sue Warsh if he didn’t cut rates if confirmed to the role.

Last week, Trump threatened to fire Powell if he refused to step down at the end of his term. But that threat injected more chaos into the situation. Firing Powell would have kicked off a lengthy legal faceoff that could have prolonged the tenure of Trump’s unwanted Fed chair.

Dropping the probe is an abrupt left-turn for an administration that appeared to be doubling down on the investigation.

On Tuesday, Trump suggested that Powell was profiting from the renovations. “I can’t imagine that ‘Too Late’ is taking money on construction. I can’t. But it’s possible,” he said, using his nickname for the head of the central bank. “But we have to find out.”

Democratic Sen. Elizabeth Warren called the probe “bogus” and said the only reason the Trump administration dropped the investigation was “to install President Trump’s sock puppet Kevin Warsh as Fed chair.”

“Anyone who believes Donald Trump’s corrupt scheme to take over the Fed is over is fooling themselves,” Warren said in a statement Friday. “The Senate should not proceed with the nomination of Kevin Warsh.”

The massive renovation

Trump toured the renovation with Powell last year. The project is expected to be finished by the fall of 2027, with a DC-based workforce of about 3,000 moving in through March 2028.

The renovation project includes buildings that “needed a lot of work,” Powell told senators last year in his semiannual testimony. The Fed’s main Eccles building in particular, Powell said, hadn’t had a serious renovation since it opened in the 1930s. “It was not really safe, and it was not waterproof.”

On its website, the Fed has posted video of water pouring into the building’s basement in 2017. And in a lengthy FAQ, the Fed laid out many of the details for the cost overruns: Asbestos abatement, a higher-than-expected water table and the rising cost of some raw materials contributed to the spiraling cost, it explained.

The construction also includes blast-resistant windows and shear walls, which are big drivers of the building’s cost, according to Fed staff during Trump’s tour. These upgrades are meant to abide by the Department of Homeland Security’s highest level of security for federal buildings.

“No one in office wants to do a major renovation of a historic building during their term,” Powell told senators at the time. “You much prefer to leave that to your successors — and this is a great example why,” he said, referring to the current backlash. “But we decided to take it on.”

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CNN’s Devan Cole contributed to this report.