The Justice Department has concluded its inquiry into excessive expenses in the reconstruction work at the Federal Reserve during Jerome Powell’s tenure as chairman, announced U.S. Attorney Jeanine Pirro on Friday. Pirro has directed the Federal Reserve’s Inspector General to thoroughly review the construction costs, emphasizing the IG’s role in ensuring accountability to the American public. She anticipates a comprehensive report to address the concerns that prompted the issuance of subpoenas by her office. However, Pirro asserted that she remains prepared to reopen a criminal investigation if warranted.
Recently, a federal judge blocked subpoenas targeting the Fed’s board of governors, ruling that they were improperly issued to pressure Powell into complying with President Donald Trump’s demands to swiftly reduce interest rates or step down. Despite this setback, Pirro had indicated plans to contest the ruling and continue the investigation. Powell’s term as chair is due to end on May 15.
The investigation by Pirro has influenced Powell’s decision to retain his position as a Fed governor until 2028, the final year of Trump’s presidency, as customary for Fed chiefs. The Trump administration’s actions, including the criminal investigation, had the potential to delay the confirmation of Kevin Warsh, Trump’s nominee to succeed Powell.
Senator Thom Tillis of North Carolina, a member of the Senate banking committee, characterized the probe as an unjustified attack on the Fed’s independence and vowed to block Warsh’s confirmation until the matter is resolved.
Critics, including Democrats and former Federal Reserve leaders, denounced the cost investigation as a pretext to undermine the Fed’s autonomy from the White House. Trump had inaccurately cited renovation costs, prompting Powell to correct him publicly. Three of the current Fed governors were appointed by former President Joe Biden, with Lisa Cook facing dismissal sought by the Trump administration, a case pending in the U.S. Supreme Court.
Senator Elizabeth Warren criticized the announcement as an attempt to pave the way for Trump’s favored candidate, Kevin Warsh, by highlighting the ongoing pursuit of Cook and the potential revival of a Powell inquiry. Warren cautioned against underestimating Trump’s efforts to influence the Fed. Warsh emphasized the importance of monetary policy independence and clarified that he made no commitments to Trump regarding interest rate adjustments.
During a Senate hearing, Warsh blamed Powell’s Federal Reserve for contributing to post-COVID-19 inflation that continues to impact American households adversely.