The Justice Department dropped its criminal investigation of the Federal Reserve and its chair, Jerome Powell, on Friday, a move that could clear a path in the Senate for President Donald Trump’s pick to replace him, Kevin M. Warsh, to be confirmed. The decision to drop the federal probe into w hether Powell lied to Congress about costly renovations of the central bank’s headquarters in Washington, D.C., opens the door for Republican Sen. Thom Tillis of North Carolina, a former Fed governor and Wall Street banker, to end his blockade of Warsh’s nomination. While Tillis, a top Republican on the Senate Banking Committee, has spoken favorably of Warsh, he has vowed to block any of Trump’s nominees until the legal threats against Powell are dropped. President Donald Trump and Federal Reserve Chair Jerome Powell argue over the cost of the central bank’s renovation project during a tour of the construction site on July 24, 2025. (Photo: Bloomberg TV YouTube Channel video screenshot) The investigation, which began last summer, was the latest in a long campaign by Trump to oust Powell, who was appointed during the president’s first term and has declined to lower interest rates despite Trump’s repeated demands that he do so. The president has continually blasted — and inflated —the prices of the $2.5 billion Fed renovation project, saying earlier this week that he had to “find out how this can happen,” The New York Times reported. Trump Loses It After TV Host Reads Shooter’s Manifesto, Then Blurts Out an Unprompted Defense That Instantly Drags Epstein Back Into the Spotlight  On Friday morning, Jeanine Pirro, U.S. Attorney for the District of Columbia, posted on X that she had directed the inspector general for the Federal Reserve to “scrutinize the building cost overruns — in billions of dollars — that have been borne by taxpayers. Accordingly, I have directed my office to close our investigation as the IG undertakes this inquiry.” In her statement, Pirro said she would “not hesitate to restart a criminal investigation should the facts warrant so.” Pirro’s decision came just two days after she said she was committed to continuing the investigation, despite a federal judge dealing the probe a crippling blow last month by quashing subpoenas her office had issued to the Fed. Powell, who has said that the real reason for Pirro’s probe was to pressure him and the Fed to lower interest rates, had already directed the Fed’s internal watchdog last year to investigate cost overruns related to the renovation, reported Politico.Construction on the Federal Reserve headquarters began in 2021, with an initial budget of $1.9 billion, reported CNN, but that has since ballooned to $2.5 billion. The Fed said the cost overruns were due to “unforeseen conditions” requiring more spending to rectify, such as “more asbestos than anticipated, toxic contamination in soil, and a higher-than-expected water table.” A spokesperson for the inspector general’s office said it is “actively working to complete” an evaluation of the Board’s building renovation project and looks forward to making the results of the investigation available to the public and Congress when it is complete.Senate Banking Committee Chairman Tim Scott, a South Carolina Republican, said he welcomed the inspector general’s review and expects “a full accounting of how these costs spiraled out of control,” adding that the banking committee will continue conducting “aggressive oversight to ensure taxpayers get the transparency and accountability they deserve.”White House spokesperson Kush Desai issued a statement that said, “American taxpayers deserve answers about the Federal Reserve’s fiscal mismanagement, and the Office of the Inspector General’s more powerful authorities best position it to get to the bottom of the matter.” “The investigation still continues,” said Press Secretary Karoline Leavitt. “It’s just under a different authority, and that’s what you’ll continue to see.” Pirro’s announcement ending the criminal investigation is a relief for Hill Republicans, some of whom have gone public with their belief that it should be stopped amid a lack of evidence that Powell committed wrongdoing, Politico reported. “I’m pleased about that, because this is not the way to run the railroad, and this gives the president a clear path for a new Fed chair, a new Fed leader,” House Financial Services Chair French Hill, an Arkansas Republican, said at a Bloomberg event. Senate Republicans expect that the Banking Committee could hold a vote on Warsh’s nomination next week, assuming Tillis is ready to drop his hold, two anonymous sources told Politico.“The White House remains as confident as before that the Senate will swiftly confirm Kevin Warsh as the next Federal Reserve Chairman to finally restore competence and confidence in Fed decision-making,” Desai said. Powell’s term as chair expires May 15, and he has said he’ll remain in that role until his successor is confirmed. He previously said he’ll make that decision only after the DOJ investigation has formally concluded. Powell said that it will depend on “what I think is best for the institution and for the people we serve.”On Tuesday, during his Senate confirmation hearing, Warsh was grilled by members of the Banking Committee, who wanted to know if he would take direction from the Trump administration when it came to interest rates. “Are you going to be the president’s human sock puppet?” asked Sen. John Kennedy, a Louisiana Republican. Warsh replied that he would rely on financial data to make that call, independent of White House influence. Three days later, Massachusetts Sen. Elizabeth Warren, the top-ranking Democrat on the Banking Committee, said the abandonment of the Powell investigation “is just an attempt to clear the path for Senate Republicans to install President Trump’s sock puppet Kevin Warsh as Fed Chair,” reported CNBC. She noted that the Justice Department had “threatened to restart the bogus criminal investigation into Fed Chair Powell at any time while failing to drop their ridiculous criminal probe against Governor Lisa Cook.” Trump last summer sought to fire Cook, who, like Powell, had resisted his demands to cut interest rates, after an official in his administration claimed she had made false statements on mortgage applications, CNBC observed. Cook denied those allegations and filed a lawsuit seeking to block her firing. She has remained on the Fed’s Board of Governors as the Supreme Court considers her case. “Anyone who believes Donald Trump’s corrupt scheme to take over the Fed is over is fooling themselves,” Warren said. ‘Corrupt Scheme’: Trump Forced to Buckle to Political Enemy as DOJ Drops ‘Bogus Criminal Investigation’ of Public Official Who Won’t Play Ball ...read more read less