Criminal probe ends with conditions attached
The Department of Justice dropped its criminal investigation into Federal Reserve Chair Jerome Powell on Friday, removing a major obstacle to the confirmation of Kevin Warsh as Powell's successor. U.S. Attorney for the District of Columbia Jeanine Pirro announced the closure in a statement, though she attached a significant caveat: the investigation could be reopened if new facts emerge.
Pirro wrote that she had "directed my office to close our investigation as the IG undertakes this inquiry," referring to the Federal Reserve's inspector general. She added a warning: "Note well, however, that I will not hesitate to restart a criminal investigation should the facts warrant doing so."
The investigation examined whether Powell had committed fraud and lied to Congress about the central bank's building renovations. Powell disclosed in January that he had received subpoenas seeking records related to those renovation costs.
Senate Republicans blocked confirmation until probe ended
Republican Senator Thom Tillis had threatened to block Warsh's nomination unless the DOJ dropped its investigation. The closure now opens a pathway for Warsh's confirmation as Fed chair. At the White House, Press Secretary Karoline Leavitt urged Tillis to move quickly, saying "Senator Tillis should do the right thing and move to confirm Kevin Warsh as speedily as possible. He is a phenomenal candidate to lead the Fed and we shouldn't be holding our nation's economy hostage because of a disagreement with the Department of Justice."
Leavitt also sought to signal that legal pressure remained on Powell despite the DOJ's announcement. She stated that "the case is not necessarily dropped," pointing to Pirro's statement transferring scrutiny to the Federal Reserve's inspector general.
Democrats question the investigation's origins
Senators Elizabeth Warren and Dick Durbin, the ranking Democrats on the Senate banking and judiciary committees, demanded that Pirro explain her threat to reopen the investigation. In a letter to Pirro, they wrote: "In recent months, your office has been engaged in a pretextual investigation into Chair Powell. Though nominally an examination of his congressional testimony about the Federal Reserve's renovation of two Washington, D.C. office buildings, the investigation was, in reality, driven by President Trump's displeasure that Chair Powell had not voted to lower interest rates at his request."
Warren and Durbin requested written responses by Monday to questions about the two investigations and Trump's role in them. They also asked whether Fed Governor Lisa Cook remained under investigation. Both Powell and Cook have been identified by Trump as enemies he wants to force out of the central bank so he can replace them with appointees who might be more compliant with his desire to cut interest rates.
The senators called for the probes to be "closed and should stay closed, with a clear statement that there is no basis for reopening them." Instead, they noted, Pirro's announcement "leaves the door wide open for you to relaunch the criminal probe against Chair Powell."
