The US Justice Department has ended its investigation into Federal Reserve Chair Jerome Powell concerning alleged cost overruns in the renovation of Federal Reserve buildings. This decision follows accusations by former President Donald Trump, who criticized the expenses related to the Fed’s building renovations. Instead of continuing the criminal probe, an internal investigation will be conducted by the Federal Reserve’s inspector general.
US Justice Department ends investigation into Jerome Powell
US Attorney Jeanine Pirro announced that the Justice Department will not pursue further criminal investigation into Jerome Powell over the renovation costs. However, she stated that the department would not hesitate to restart the investigation if new facts warrant such action. The Federal Reserve’s inspector general is actively reviewing the matter and plans to release the results to the public and Congress once the review is complete.
The renovations in question involve the Eccles Building and the 1951 Constitution Avenue building, which are undergoing their first major overhaul since the 1930s. The work includes removing asbestos and lead contamination and is expected to reduce costs over time, according to the Federal Reserve.
Background and political context
President Donald Trump had repeatedly criticized the renovation costs, claiming they would reach $3.1 billion, exceeding the Fed’s forecast of $2.5 billion. This dispute was part of a broader conflict between Trump and Powell, especially regarding monetary policy. Trump frequently called for lower interest rates and expressed dissatisfaction with Powell’s refusal to comply, even branding him a “knucklehead” and threatening to fire him.
Powell publicly addressed the investigation in January, describing it as “unprecedented” and suggesting it was motivated by political pressure from Trump due to the Fed’s independent decisions on interest rates. He emphasized the importance of maintaining the Federal Reserve’s independence from political influence.
Senate confirmation and ongoing developments
Powell’s term as Federal Reserve Chair is nearing its end, with his term set to expire in mid-May. President Trump has nominated Kevin Warsh as Powell’s replacement, but the Senate has yet to confirm Warsh. Senator Thom Tillis, a key Republican, has withheld support for Warsh pending the resolution of the investigation into Powell.
The White House has expressed confidence that the Senate will confirm Warsh swiftly to restore “competence and confidence” in Federal Reserve decision-making. Meanwhile, Powell plans to remain in his position until his successor is confirmed.