The US Justice Department has closed its investigation into Federal Reserve Chairman Jerome Powell, a move seen as removing an obstacle to the confirmation of Kevin Warsh, President Donald Trump’s nominee to lead the central bank, with Powell’s term as head of the central bank ending on May 15.US Attorney Jeanine Pirro said the criminal investigation into cost overruns linked to renovations at the Federal Reserve’s headquarters in Washington will be closed, with scrutiny now continuing through the Office of the Inspector General (OIG), which is already reviewing the project, Reuters reported.“I have directed my office to close our investigation as the (Office of Inspector General) is handling this investigation,” Pirro said in a social media post, adding that she could launch a criminal investigation “if the facts justify doing so.”The move is also important amid Trump’s long-running conflict with Powell over interest rates and broader concerns about the Fed’s independence.The investigation was examining the $2.46 billion Fed headquarters renovation project, including cost overruns and Powell’s statements to Congress last year.Reuters reported that the current budget is about $1.1 billion more than its 2020 allocation, with increases largely due to higher labor and material costs.
According to The Guardian, the investigation was first announced in January after Powell revealed in a video that he had been subpoenaed by the Justice Department and said the probe was being used to pressure the Fed over monetary policy.It suffered a major setback last month when Chief U.S. District Judge James Bosberg blocked subpoenas issued to the Fed’s Board of Governors, saying prosecutors had shown “essentially zero evidence” that Powell committed a crime and concluding that the subpoenas were issued for an improper purpose.Warsh’s path to confirmation has also been hampered by the investigation, with Republican Sen. Thom Tillis saying he would not support the nomination as long as the investigation is active. During Wershe’s confirmation hearing, Tillis said, “Let’s get rid of the investigation so I can support your nomination.”Trump has also defended scrutiny of Powell, saying last week: “Whether it’s incompetence or corruption or both, I think you’ve got to find out.”Powell said he has no intention of leaving the Fed until the matter is resolved “transparently and definitively.”Pirro said the Fed’s internal watchdog will continue to study the matter, and Senate Banking Committee Chairman Tim Scott has sought a briefing within 90 days.The US Supreme Court is also expected to issue a ruling by June on whether Trump’s firing of Federal Reserve Governor Lisa Cook was constitutional, leaving broader questions about the central bank’s independence under scrutiny.
