The Justice Department has ended its investigation into Federal Reserve Chair Jerome Powell, allowing the Fed’s inspector general, Michael Horowitz, to take over the investigation.
But U.S. Attorney for the District of Columbia Jeanine Pirro said in her announcement that she “would not hesitate” to open a new criminal investigation if deemed necessary.
“This morning the Inspector General for the Federal Reserve has been asked to scrutinize the building costs overruns — in the billions of dollars — that have been borne by taxpayers," she posted on X. “The IG has the authority to hold the Federal Reserve accountable to American taxpayers. I expect a comprehensive report in short order and am confident the outcome will assist in resolving, once and for all, the questions that led this office to issue subpoenas. Accordingly, I have directed my office to close our investigation as the IG undertakes this inquiry.”
The federal investigation was opened last January over Powell’s testimony before the Senate Banking Committee last June regarding the renovation of the Federal Reserve’s headquarters.
At the time, Powell said the criminal indictment has nothing to do with his testimony, but rather President Trump’s desire for the country’s central banking system to lower interest rates.
“I have deep respect for the rule of law and for accountability in our democracy. No one — certainly not the chair of the Federal Reserve — is above the law. But this unprecedented action should be seen in the broader context of the administration’s threats and ongoing pressure," Powell said in a public statement. “This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions — or whether instead monetary policy will be directed by political pressure or intimidation."
Path for Trump’s new chair is open
Now that the DOJ’s investigation has closed, the path for Trump’s replacement of Powell to be confirmed is open. Powell’s term as chair of the Reserve Governors concludes in May, and Trump has already selected Kevin Warsh as his desired replacement.
But Warsh, who served on the Federal Reserve Board of Governors from 2006 to 2011, will need to be confirmed by the Senate to become chair.
Following Warsh’s testimony before the Senate Banking Committee, North Carolina Republican Sen. Thom Tillis, said he would only vote in Warsh if the criminal investigation into Powell was dropped.
“Kevin Warsh is a great nominee to be Chairman of the Federal Reserve, and I look forward to supporting him out of committee once the DOJ drops their bogus investigation into Chairman Powell that threatens the independence of the Fed,” he said on X.
That hurdle now seems to be crossed. As inspector general, Horowitz will now investigate the central bank’s renovation project.