The Justice Department has closed its criminal investigation into Federal Reserve Chair Jerome Powell, removing a major obstacle that threatened to derail Kevin Warsh's nomination as Powell's successor.
Jeanine Pirro, the Trump-appointed U.S. attorney for the District of Columbia, announced the closure in a social media post. She said her office was shutting down the inquiry into cost overruns at Federal Reserve headquarters, while reserving the right to reopen it if circumstances change.
The investigation had become a flashpoint between the White House and the central bank. Powell himself revealed the probe in January, releasing a video statement after receiving a subpoena. In unusually candid remarks aimed at the administration, Powell argued the criminal inquiry was not genuinely about budget matters but rather served as "pretexts" designed to pressure the Fed into cutting interest rates.
"This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions, or whether instead monetary policy will be directed by political pressure or intimidation," Powell said at the time.
The investigation had become a political liability for the White House. Republican Senator Thom Tillis made clear he would block Warsh's confirmation unless the Justice Department ended the probe, effectively holding the nomination hostage. During Warsh's Senate hearing on Tuesday, Tillis told the nominee: "Let's get rid of the investigation so I can support your nomination."
Tillis's vote was critical. Republicans need his support to advance Warsh through the Senate banking committee. Trump's pressure on the Federal Reserve over interest rate policy has been unrelenting. He has called Powell a "moron" for opposing rate cuts and, even as the investigation faced mounting criticism last week, doubled down on its continuation, saying investigators had to determine whether misconduct stemmed from "incompetence, corruption or both."
Warsh, a former investment banker and Federal Reserve governor, signaled during his confirmation hearing that he shares Trump's appetite for lower rates. That alignment prompted concern among Democrats about whether he could maintain the central bank's independence from political pressure. Most economists view an independent, nonpolitical Federal Reserve as essential to economic stability.
Powell's term expires May 15. Even with the investigation closed, Trump's conflict with the Fed is far from finished. The Supreme Court is expected to rule by June on whether Trump's firing of Fed Governor Lisa Cook, who was temporarily restored to her position by a federal court, was constitutional.
Author James Rodriguez: "The timing is too convenient and the message too clear: investigations into Fed leadership disappear once confirmation obstacles emerge."
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