A criminal investigation into Federal Reserve Chair Jerome Powell has been closed, shifting the focus to an internal watchdog inquiry. Pirro announced Friday that the Fed’s inspector general has been tasked with investigating cost overruns related to the headquarters project.
Shift in Investigation Focus
The criminal probe had been based on purported cost overruns in the Federal Reserve’s headquarters project. However, Powell and other associates claimed the investigation was actually intended to pressure the Fed to lower interest rates according to Trump’s wishes.
Pirro stated via an X post that the inspector general possesses the authority to hold the Federal Reserve accountable to taxpayers. She expressed confidence that a comprehensive report will resolve the questions that originally led to the issuance of subpoenas.
While the current investigation is closed, Pirro noted she would not hesitate to restart a criminal probe if the facts warrant such action. White House spokesman Kush Desai added that the inspector general’s authorities are best positioned to address the matter of fiscal mismanagement.
Implications for Fed Leadership
The resolution of the probe appears closely tied to the confirmation of Kevin Warsh as the next Federal Reserve Chairman. Warsh appeared for his Senate Banking, Housing and Urban Affairs Committee confirmation hearing on April 21, 2026.
Senate Banking Committee Chairman Tim Scott, R-S.C., previously argued that ending the criminal probe was essential to securing Warsh’s confirmation. Scott suggested that relevant information regarding the headquarters project could be made available after Warsh is confirmed.
Potential Next Steps
A possible next step involves the creation of a new oversight body. Chairman Scott suggested working with the House Financial Services Committee to establish a committee for permanent oversight of construction projects within the banking committee’s jurisdiction.
Depending on the findings of the inspector general, this process could potentially lead to a criminal referral. Meanwhile, the White House maintains confidence that the Senate will swiftly confirm Warsh to restore confidence in Fed decision-making.
Frequently Asked Questions
Why was the criminal investigation into Jerome Powell closed?
The investigation was closed because the Fed’s inspector general has been asked to investigate the cost overruns in the headquarters project, which served as the purported basis for the criminal probe.
What was the alleged motive behind the original probe?
Jerome Powell and others claimed the real reason for the investigation was to pressure him and the Federal Reserve to lower interest rates as Trump wanted.
Who is nominated to be the next Federal Reserve Chairman?
Kevin Warsh is the nominee for chairman of the Federal Reserve.
Do you believe an internal watchdog is the appropriate entity to handle allegations of fiscal mismanagement at the Federal Reserve?
