WASHINGTON - The U.S. Attorney for the District of Columbia announced on Friday that her office is closing the probe into Federal Reserve Chair Jerome Powell concerning cost overruns on renovations to Fed buildings, a development that may remove a central barrier to the Senate confirmation of President Donald Trump's nominee to lead the Federal Reserve, Kevin Warsh.
Jeanine Pirro, who directs federal prosecutions in the nation's capital and is an ally of the president, said she asked the Federal Reserve's Office of Inspector General to take up the matter instead. The inspector general was already examining the renovation project after Powell requested a review last year.
"The IG has the authority to hold the Federal Reserve accountable to American taxpayers," Pirro said in a social media post. "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."
Background of the inquiry
The investigation had focused on the renovations to the Fed's Washington headquarters and on Powell's testimony to Congress last year about the project. The inquiry drew heightened scrutiny after a federal judge intervened, finding the subpoenas issued to the Fed's Board of Governors were improper and suggesting the inquiry may have been intended to pressure Powell over monetary policy decisions.
Chief U.S. District Judge James Boasberg ruled last month that prosecutors had proffered "essentially zero evidence" that Powell committed a crime and blocked subpoenas to the Fed. The judge concluded the subpoenas appeared to be issued for the improper purpose of attempting to make Powell accede to the president's demands to quickly lower interest rates or step down.
Pirro had publicly said as recently as this week that she intended to press on with the probe and to appeal the ruling, though Justice Department lawyers had not filed an appeal in court at the time she announced the referral to the inspector general. She justified the initial inquiry by citing reports of cost overruns tied to the roughly $2.5 billion renovation project.
Political and confirmation consequences
The investigation had become a focal point in Senate deliberations over Warsh's nomination. Republican Senator Thom Tillis of North Carolina, a member of the Senate Banking Committee, had signaled he would not back Warsh until the Justice Department ended what he described as a baseless investigation into Powell. Tillis' refusal effectively stalled Warsh's path to confirmation.
On Friday, a spokesperson for Tillis offered no immediate comment. During Warsh's confirmation hearing earlier in the week, Tillis indicated he would support the nominee if the Justice Department discontinued the Powell probe.
The chair of the Senate Banking Committee, Republican Tim Scott of South Carolina, said he would request that the inspector general brief the committee on its findings within 90 days. A Fed spokesperson declined to comment on the referral.
A White House spokesperson said the inspector general was the appropriate body to investigate the renovation matter and expressed confidence the Senate would confirm Warsh. The decision to end the Justice Department investigation could open the way for Warsh to be confirmed as Fed chair, possibly by May 15, when Powell's leadership term as chair expires. The announcement, however, does not resolve whether Powell will leave his role as a member of the Board of Governors.
Powell himself stated in January that he had no intention of departing the Board "until the investigation is well and truly over, with transparency and finality." Pirro added on Friday that she might resume her office's investigation depending on the conclusions reached by the inspector general.
Inspector general review and renovation figures
Federal Reserve budget documents show the current budget for the two-building overhaul is $2.46 billion, roughly $1.1 billion above what was originally budgeted in 2020. The Fed attributes most of the increase to higher material and labor costs following the post-pandemic surge in inflation.
The Fed's Office of Inspector General confirmed it has been reviewing the renovation since July 2025 and is examining "substantial cost increases and overruns." The inspector general's office said it is actively working to complete its review and plans to make results available to the public and Congress when the review is finished.
The inspector general has previously issued two audits related to the renovation project. One, published in March 2021, recommended improvements in project management. A second, issued in February 2022, described the process for modifying the renovations as "generally effective."
Legal and political context
Powell disclosed the Justice Department's investigation in January and characterized it as a pretext for the president to obtain influence over the Fed's policy decisions, delivering that message in a direct video statement. President Trump has repeatedly criticized Powell for resisting pressure to quickly lower interest rates and publicly supported an inquiry into the renovation expenditures.
In his ruling to quash subpoenas, Judge Boasberg cited public remarks by the president that labeled Powell with pejoratives, noting that the president had used terms including "numbskull," "major loser" and "very incompetent."
What comes next
With the Justice Department's probe on hold and the matter in the hands of the inspector general, the Senate could move forward on Warsh's confirmation. At the same time, Powell's position on the Board remains conditioned on the inspector general's findings and on whether Pirro chooses to reopen her office's investigation.
The inspector general's final report, when issued, will be pivotal for resolving the outstanding questions that led to subpoenas and for determining whether the Justice Department will resume its review. Until that report is completed, uncertainties will persist around both the leadership transition at the Fed and accountability for the renovation project's cost increases.