U.S. NEWS – Jerome Powell and Donald Trump stand at the center of a political and financial controversy that took a decisive turn Friday, as federal prosecutors ended a criminal investigation into the central bank’s leadership.
According to a report by CNBC and journalist Steve Kopack, the U.S. Department of Justice has formally closed its inquiry into the Federal Reserve and its chairman over a costly renovation project at its Washington, D.C. headquarters.
The decision was announced by Jeanine Pirro, who stated that responsibility for further review would now fall to the Federal Reserve’s internal watchdog. She confirmed that the Office of the Inspector General will examine the project’s ballooning costs—reportedly in the billions—effectively replacing the criminal probe with an administrative review.
Pirro noted that while the investigation has been closed, it could be reopened if new evidence emerges.
Inspector General Review Takes Center Stage
The renovation project, involving two historic Federal Reserve buildings dating back to the 1930s, has faced intense scrutiny after its estimated cost climbed from roughly $1.9 billion to about $2.5 billion. Officials cited unexpected complications, including rising material and labor costs, the discovery of additional asbestos, and even a sinkhole at the site.
The Inspector General had previously reviewed the project twice and found no evidence of wrongdoing. At Powell’s request, the watchdog was asked to revisit the matter again in 2025 amid mounting political pressure.
Political Fallout and Senate Implications
The closure of the investigation carries major political consequences. It removes a key obstacle for Kevin Warsh, President Trump’s nominee to lead the central bank. Warsh’s confirmation had been stalled in the Senate, largely due to concerns surrounding the probe.
Thom Tillis had previously blocked the nomination, calling the investigation into Powell “bogus” and arguing there was no clear evidence of criminal conduct. Other lawmakers echoed similar sentiments.
With the investigation now closed, White House officials signaled confidence that Warsh’s nomination will advance quickly. Spokesman Kush Desai emphasized the need for accountability in federal spending but expressed optimism about restoring “confidence” in Federal Reserve leadership.
Trump’s Ongoing Criticism of Powell
The renovation controversy has unfolded against a backdrop of long-standing tensions between Trump and Powell. The president has repeatedly criticized the Fed chair, particularly over monetary policy decisions, including interest rate strategies set by the Federal Open Market Committee.
During a high-profile visit to the construction site in 2025, Trump publicly challenged Powell over the project’s cost, citing figures higher than official estimates. Powell pushed back in real time, stating he had not seen such numbers.
Some administration officials went further, comparing the project to extravagant landmarks like the Palace of Versailles and accusing Fed leadership of financial mismanagement—claims Powell and others have disputed.
Broader Context
The renovation itself was initially approved in 2017 by the Federal Reserve Board, before Powell assumed leadership in 2018. Still, the issue has become a focal point in broader debates over government spending, institutional independence, and political pressure on the central bank.
In an earlier statement responding to the investigation, Powell underscored that no public official is above the law, while also warning that the probe should be viewed in the context of ongoing political tensions.
With the criminal inquiry now off the table, attention shifts to the Inspector General’s findings—and to the Senate, where Warsh’s nomination may soon come to a decisive vote.
— This article is adapted from reporting by Steve Kopack, originally published by CNBC.
