Why It Matters
The Justice Department’s decision to close a criminal investigation into Federal Reserve Chair Jerome Powell and building renovation costs removes a key obstacle to Senate consideration of President Donald Trump’s nominee to lead the central bank. The move follows pressure from a Republican senator whose vote is critical to advancing the nomination.
North Carolina Senator Thom Tillis had threatened to block the nomination of former Fed Board Governor Kevin Warsh unless the administration ended what he called a “bogus” investigation into Powell.
What Happened
U.S. Attorney Jeanine Pirro announced Friday that her office closed the probe into the Federal Reserve and Powell after referring the matter to the Fed’s inspector general to examine cost overruns on a building renovation project. Pirro said the inspector general has authority to hold the Fed accountable to taxpayers and that she expects a comprehensive report.
The U.S. Attorney said she would restart a criminal investigation if facts warranted doing so. A federal judge had previously blocked administration subpoenas related to the probe.
Powell’s term as Fed Chair expires in May. Trump has repeatedly criticized Powell publicly and threatened to fire him over interest rate policy.
By the Numbers
The investigation focused on a $2.5 billion renovation project at Fed offices in Washington. Trump claimed Thursday he could have completed the headquarters renovation for $25 million.
The Senate Banking Committee is closely divided, making Tillis’s vote necessary to advance Warsh’s nomination. All panel Democrats oppose the nominee.
The Politics
Tillis had said he would not vote for Warsh unless the administration dropped the investigation. His office did not immediately comment on the announcement.
Democratic Senator Elizabeth Warren dismissed the Justice Department’s move as an attempt to clear the path for Republicans to confirm Warsh, calling him Trump’s “sock puppet.” Warren also noted the administration has not dropped a separate probe against Fed Board Governor Lisa Cook, whom Trump fired in August over alleged financial fraud. Cook successfully challenged her removal in lower courts, and the Supreme Court is reviewing whether Trump legally dismissed her.
What’s Next
The Banking Committee can now move forward with consideration of Warsh’s nomination to replace Powell as Federal Reserve Chair. A White House spokesperson said the administration remains confident the Senate will swiftly confirm Warsh.
The Fed’s inspector general is expected to produce a report on the renovation costs. Pirro indicated her office could reopen the investigation depending on those findings.