Federal Reserve Chair Jerome Powell is no longer under investigation by the U.S. Justice Department, a decision that may impact President Trump’s efforts to appoint a new Fed chair.
The U.S. Justice Department has officially closed its investigation into Federal Reserve Chair Jerome Powell, a move that could have significant implications for President Donald Trump’s administration. The decision comes amid ongoing scrutiny of the Federal Reserve’s financial management, particularly regarding construction cost overruns that have reportedly reached billions of dollars.
U.S. Attorney for D.C. Jeanine Pirro announced the closure of the investigation in a post on X, stating, “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. Accordingly, I have directed my office to close our investigation as the IG undertakes this inquiry.”
According to NBC News, the Federal Reserve’s Inspector General had previously reviewed the project twice and found no evidence of wrongdoing. The review was initiated again in 2025 at the request of Powell, who faced mounting pressure from Trump and his allies.
Despite the closure of the investigation, the situation may still present a silver lining for Trump. The end of the inquiry could facilitate the confirmation process for Trump’s nominee to chair the Federal Reserve, Kevin Warsh. White House Spokesman Kush Desai expressed confidence in Warsh’s potential confirmation, stating, “American taxpayers deserve answers about the Federal Reserve’s fiscal mismanagement, and the Office of the Inspector General’s more powerful authorities best position it to get to the bottom of the matter.” Desai added that the White House remains optimistic that the Senate will swiftly confirm Warsh to restore competence and confidence in the Fed’s decision-making.
Trump has been vocal in his criticism of Powell, frequently pressuring him to implement sharp cuts to benchmark interest rates set by the Federal Open Market Committee. The tensions between the two escalated during a summer visit to a Federal Reserve construction site, where Trump confronted Powell over renovation costs that he claimed had ballooned to approximately $3.1 billion. Powell publicly disputed this figure during a live television appearance, stating he had not heard such an estimate.
The situation further intensified when White House budget director Russell Vought criticized Powell, likening the renovation project to the Palace of Versailles and accusing him of fiscal mismanagement. Notably, the renovation had been approved in 2017, prior to Powell’s tenure as chair.
In response to the political pressure surrounding the investigation, the Federal Reserve issued a rare statement after subpoenas were issued by Pirro’s office. The Fed warned that such actions should be viewed in the broader context of political pressure on the central bank and the threats posed to its independence.
Senate Republican Tim Scott subsequently blocked Fed nominees, asserting that no official is above the law. In defense of the institution, Powell argued that the subpoenas were part of ongoing attempts to influence interest rate policy. A federal judge later intervened, blocking the subpoenas and finding insufficient evidence of wrongdoing, suggesting that they were politically motivated.
The closure of the investigation into Powell marks a significant development in the ongoing tensions between the Federal Reserve and the Trump administration. As the political landscape continues to evolve, the implications of this decision will likely resonate throughout the financial sector and beyond.
For further details, see NBC News.