In a move that resolves a high-stakes political standoff over the independence of America’s central bank, the US Department of Justice announced Friday it has ended its criminal investigation into Federal Reserve Chair Jerome Powell. The development clears a major procedural hurdle for the confirmation of President Donald Trump’s nominee to lead the Fed, after weeks of controversy over what critics called a politically motivated inquiry.
US Attorney Jeanine Pirro made the announcement of the probe’s closure via the social platform X, confirming that oversight of the Fed’s headquarters renovation cost overruns — the core issue that sparked the Justice Department investigation — will now be handled by the Federal Reserve’s own inspector general. The investigation, which opened under intense public and private pressure from President Trump, will remain dormant for the time being, but Pirro left open the possibility of reviving criminal proceedings if new evidence emerges.
“I will not hesitate to restart a criminal investigation should the facts warrant doing so,” Pirro said in her public statement.
The probe has been a flashpoint in US politics for months, as Trump has repeatedly broken longstanding Washington norms to publicly and personally attack Powell, repeatedly calling on the Federal Reserve to cut interest rates far more aggressively than the central bank’s independent policy framework has allowed. With Powell’s four-year term as Fed chair set to expire on May 15, the looming investigation threatened to delay the Senate’s consideration of Trump’s pick to replace him, former Fed governor Kevin Warsh.
Shortly after the Justice Department’s announcement, White House spokesman Kush Desai reaffirmed the administration’s optimism that the Senate will move quickly to confirm Warsh. “The Trump administration remains as confident as before that the Senate will swiftly confirm Kevin Warsh as the next Federal Reserve Chairman,” Desai said.
Critics across the political spectrum, including former Federal Reserve chairs and sitting lawmakers from both parties, had denounced the investigation as an unprecedented attempt to erode the central bank’s long-held independence from political interference. The standoff reached a breaking point this week, when Republican Senator Thom Tillis of North Carolina, a member of the Senate Banking Committee, made clear he would continue blocking all new Fed appointments if the Powell investigation was not resolved. A single defection from Tillis would have been enough to create a deadlock on the panel, which Warsh must pass to move to a full Senate vote.
Even with the probe closed, however, top Democratic lawmakers warn that political pressure on the Federal Reserve remains far from over. Senate Banking Committee ranking member Senator Elizabeth Warren called the investigation a “bogus” inquiry, noting that the Justice Department’s action still leaves open the threat of renewed proceedings against Powell at any time, while a separate criminal investigation into Fed Governor Lisa Cook remains active. That probe stems from Trump’s move to attempt to fire Cook over unproven mortgage fraud allegations, a case that is currently before the US Supreme Court. Justices are set to rule on whether Trump has the legal authority to oust a sitting Fed governor.
Powell, who first took office as Fed chair in 2018 during Trump’s first term and was reappointed by Democratic President Joe Biden in 2022, said last month that he would not step down from his lifetime seat on the Fed’s Board of Governors until the investigation against him was concluded with full transparency and finality. It is unusual for a former Fed chair to remain on the board after leaving the leadership post, and Powell’s current term as governor runs through 2028. It remains unclear whether Powell will choose to stay on the board now that the probe has been closed.
All market and political observers are now turning their attention to Powell’s scheduled press conference next week, which will follow the conclusion of a two-day monetary policy meeting by the Federal Open Market Committee, where he is expected to address his future plans and the end of the investigation.