DOJ Drops Criminal Probe Into Federal Reserve Chair Jerome Powell, Refers Matter to Inspector General
Why It Matters
The Department of Justice’s decision to close its criminal investigation into Federal Reserve Chair Jerome Powell removes a significant obstacle to confirming President Trump’s pick to lead the nation’s central bank. The resolution clears a political standoff that had stalled the confirmation process at the national level.
The move also shifts accountability for the Federal Reserve’s multibillion-dollar building renovation costs from the criminal justice system to the Fed’s own Inspector General — a change that could have lasting implications for how Congress and the executive branch oversee the central bank’s handling of taxpayer funds.
What Happened
The Department of Justice announced Friday it will drop its criminal probe into Powell, marking a sharp reversal in what had been an unprecedented investigation into the nation’s top central banker. The inquiry had centered on whether Powell committed fraud and misled Congress regarding the Federal Reserve’s multibillion-dollar building renovation projects.
U.S. Attorney for the District of Columbia Jeanine Pirro announced the decision, stating she had directed her office to close the investigation as the Federal Reserve’s Inspector General takes over the inquiry. Pirro made the announcement on X, citing the IG’s authority to scrutinize the building cost overruns and hold the Fed accountable to American taxpayers.
“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,” Pirro wrote. “The IG has the authority to hold the Federal Reserve accountable to American taxpayers.”
Pirro added that she expects “a comprehensive report in short order” and expressed confidence the outcome will help resolve “the questions that led this office to issue subpoenas.”
By the Numbers
Key figures surrounding the investigation include:
• Billions of dollars in building renovation cost overruns at the Federal Reserve, which Pirro described as being “borne by taxpayers.”
• January 2026 — the month Powell disclosed receiving subpoenas seeking records related to the central bank’s building renovations.
• 1 Inspector General — the Federal Reserve’s IG has now been formally tasked with conducting a comprehensive review of the building expenditures.
• 1 senator — Sen. Thom Tillis (R-N.C.) had blocked the confirmation of Trump’s Fed chair nominee until the criminal investigation was officially closed.
Zoom Out
The investigation into Powell was widely described as unprecedented — no sitting Federal Reserve chair had previously been subjected to a criminal probe of this nature. The episode reflects broader scrutiny of federal agency spending and institutional accountability that has intensified under the current administration.
President Trump has been vocal about his desire to reshape federal monetary leadership, and the confirmation impasse highlighted the intersection of congressional oversight, executive appointments, and central bank independence. The administration has pushed aggressively for spending accountability across federal agencies, a posture consistent with its proposed $1.5 trillion defense budget alongside sweeping domestic spending cuts.
The transfer of oversight responsibility to the Inspector General rather than the criminal justice system is a commonly used mechanism when questions involve institutional mismanagement rather than clear-cut criminal conduct. IG investigations carry subpoena power and can produce binding recommendations, but do not result in criminal prosecution directly.
Republicans in Congress have increasingly pointed to government spending accountability as a central priority. The Powell probe fits within that larger narrative of demanding transparency from federally tied institutions over the use of taxpayer dollars, a theme also reflected in the administration’s fiscal year 2027 defense budget priorities.
What’s Next
With the criminal investigation now closed, Senator Tillis is expected to lift his hold on the confirmation of President Trump’s nominee to lead the Federal Reserve, clearing the path for a Senate confirmation vote. The timeline for that vote has not been formally announced.
The Federal Reserve’s Inspector General is expected to deliver a comprehensive report on the building renovation cost overruns. Pirro indicated she is confident the IG inquiry will resolve the underlying questions that prompted her office’s original subpoenas.
Congress may also take up the matter through its own oversight channels, given the bipartisan interest in how billions of dollars in renovation expenses were approved and managed at the central bank.