DOJ Drops Criminal Probe of Fed Chair Powell

Peace talks with Iran are set to resume this weekend in Pakistan. President Trump is sending special envoy Steve Witkoff and Jared Kushner, his son-in-law, to lead the delegation, while Vice President JD Vance, who led an earlier round of talks, will be on "standby" to join the negotiations if necessary, the White House said. The Iranians are also not sending their top negotiator.

Here's what else is happening.

Justice Department Drops Criminal Probe of Fed Chair Powell

Federal prosecutors are ending their controversial criminal investigation of Federal Reserve Chair Jerome Powell related to construction cost overruns at the central bank's headquarters. The move potentially clears the path for President Trump's nominee, Kevin Warsh, to take the reins at the Fed when Powell's term concludes on May 15.

U.S. Attorney Jeanine Pirro, the former Fox News host appointed by Trump as the top federal prosecutor in Washington, D.C., said Friday that she had asked the Inspector General for the Federal Reserve to look into the cost overruns during the central bank's ongoing $2.5 billion renovation of its headquarters buildings.

"The IG has the authority to hold the Federal Reserve accountable to American taxpayers," Pirro said on social media. "Accordingly, I have directed my office to close our investigation as the IG undertakes this inquiry."

Pirro said she expects to see a "comprehensive report" soon from the IG that will clarify the issue. She also said that the cost overruns in question stretched into "the billions of dollars" and "have been borne by taxpayers." The Fed, however, is a self-funding institution and does not receive appropriations from Congress, and the actual cost overrun is closer to $600 million, with the estimated cost of the renovation project rising from $1.9 billion in 2017 to $2.5 billion now.

The Tillis block: Republican Sen. Thom Tillis, who sits on the Banking, Housing, and Urban Affairs Committee, has pledged to block Trump's pick to lead the Fed until the DOJ wraps up its probe of Powell. Tillis and others have seen the investigation as a blatantly political assault on the central bank and its leader, put into motion after Powell failed to heed Trump's repeated calls to lower interest rates. Last month, Tillis called the criminal investigation "weak and frivolous," and "nothing more than a failed attack on Fed independence." During testimony by Warsh in front of the Banking Committee earlier this week, Tillis told the nominee that he wanted the investigation to end so he could move ahead and support his nomination.

A prosecutor in the case acknowledged at a court hearing last month that the government had found no evidence of a crime, and a federal district court judge subsequently threw out subpoenas that had been issued to the Federal Reserve.

In the meantime, Powell has said that he would remain in place until his replacement is ready, even if the standoff continues past May 15. Last month, Powell, who has the option to remain on the Fed board until 2028 after stepping down as chair, told reporters that he had "no intention of leaving the board until the investigation is well and truly over, with transparency and finality." Trump then threatened to fire him, not for the first time.

More twists ahead? Pirro is leaving the door open to resume the federal probe. "Note well ... that I will not hesitate to restart a criminal investigation should the facts warrant doing so," she said.

White House Press Secretary Karoline Leavitt made the same point, telling reporters that the case "is not necessarily dropped, it's just being moved over to the inspector general." Leavitt said the IG would continue to look into what she described as "financial mismanagement at the Fed," while repeating Pirro's false claim that the renovations "are costing taxpayers billions of dollars."

Tillis did not immediately respond to the news, and there are questions about whether DOJ's actions are enough to win his vote for Warsh. One Democratic lawmaker said she doubts that the investigation is over, while reiterating her opposition to Warsh's nomination.

"This is just an attempt to clear the path for Senate Republicans to install President Trump's sock puppet Kevin Warsh as Fed Chair," Sen. Elizabeth Warren, the top Democrat on the Banking Committee, said in a statement. "Let's be clear what the Justice Department announced today: they threatened to restart the bogus criminal investigation into Fed Chair Powell at any time."

On social media, Warren called on Tillis to maintain his block, writing, "No Republican claiming to care about Fed independence should move Warsh's nomination forward."

Dour Consumers Blame Trump for Surge in Gas Prices

Americans have a grim view of the economy, with consumer sentiment falling to a record low this month as measured by the University of Michigan's survey. The university said Friday that its final Consumer Sentiment Index for April dropped 6.6% from March and 4.6% from a year ago to an all-time low of 49.8, just below the reading of 50 recorded in June 2022.

The final number for April was a slight improvement over the preliminary index reading of 47.6 reported earlier this month. Yet it is notably below the sentiment levels found in Michigan's survey during recessions, the 2008 financial crisis and the Covid-19 pandemic.

Inflation expectations for a year from now jumped from 3.8% in March to 4.7% this month, the largest one-month increase since April 2025, when President Trump announced his sweeping "Liberation Day" tariffs. And longer-run inflation expectations rose this month to 3.5%, the highest since October 2025.

"Decreases in sentiment were seen across political party, income, age, and education," surveys director Joanne Hsu said in a statement. "After the two-week cease-fire was announced and gas prices softened a touch, sentiment recovered a modest portion of its early-month losses. The Iran conflict appears to influence consumer views primarily through shocks to gasoline and potentially other prices. In contrast, military and diplomatic developments that do not lift supply constraints or lower energy prices are unlikely to buoy consumers."

Consumers blame Trump for higher gas prices: With gas prices hovering above $4 a gallon - compared with $3.17 a gallon a year ago, according to AAA - a new Reuters/Ipsos poll out Friday showed that most Americans blame Trump for the increase.

The Reuters survey, conducted from April 15 to 20, found that more than three-quarters of Americans say that Trump bears at least a "fair amount" of responsibility for the recent surge in gas prices. More than half, 54%, say Trump shoulders a "great deal" of blame for the higher prices, compared with 6% who say he is not responsible for the increase.

Nearly all Democrats, 95%, blame Trump for the rise in costs, and 82% of independents share that view, but Republicans don't spare the president, either, as 55% say the gas prices are his responsibility.

The survey also found that 82% call inflation a very big concern for them personally, and 77% say the same about fuel prices specifically. Just 27% agreed with the notion, which Trump said recently, that the economy is "booming," while 70% disagreed with that statement, including 38% who strongly disagreed.

Nearly six in 10 voters in the survey say they would be less likely to support candidates who back Trump's approach to the war with Iran in this year's midterm elections.

The Reuters poll surveyed 4.557 U.S. adults, including 3,577 registered voters. It had a margin of error of 2 percentage points.

The bottom line: "More pain will come as higher transportation costs are passed along for food, appliances, toys and every other item that travels on a ship, car or plane," Heather Long, chief economist at Navy Federal Credit Union, told Reuters. "Sentiment won't improve until the Strait of Hormuz is open and there is a permanent end to the conflict."

Fiscal News Roundup

• Justice Department Drops Criminal Probe of Fed Chair Powell, Likely Clearing the Way for Warsh – Associated Press
• 'Tillis Won': DOJ Drops Probe Into Powell, Fed Renovations – Politico
• Leavitt Says Powell Probe 'Not Necessarily Dropped,' 'Just Under a Different Authority' – The Hill
• GOP Senators Ratchet Up Pressure on Speaker Johnson to Quickly End DHS Shutdown – The Hill
• DHS Earmarks Millions for 'Smart Glasses' for Immigration Agents – The Hill
• Tariffs Raised Consumers' Prices, but the Refunds Go Only to Businesses – New York Times
• Hegseth Accuses Europe, Asia of 'Freeriding' Over Hormuz – Bloomberg
• U.S. Floats Punishing NATO Members for Refusing to Join Iran War – Foreign Policy
• As US Re-Arms During Iran Ceasefire, Long-Term Concerns Emerge About Advanced Munitions Supplies – CBS News
• US Official: No Hope for Global Carbon Tax – Politico
• Scott Bessent: Donald Trump's Economic Engineer – Wall Street Journal
• Congress Keeps Holding All-Nighters, Creating Dysfunction After Dark – Associated Press

Views and Analysis

• Congress Has Become Almost Totally Irrelevant – David Dayen, American Prospect
• Most Americans Think the Job Market Will Get Worse. Here's Why That Matters – Justin Lahart and Owen Tucker-Smith, Wall Street Journal
• How Kevin Warsh Could Shrink the Fed's Footprint in Financial Markets – Colby Smith, New York Times
• Powell Should Take the Win in the DOJ Probe and Leave Now – Jonthan Levin, Bloomberg
• Time to Stop Lionizing Powell – Robert Kuttner, American Prospect
• RFK Jr. Can't Hide From Measles' Comeback – Lisa Jarvis, Bloomberg
• The Oil Futures Market Is Lying to Us – Liam Denning, Bloomberg
• 'Two Ways of Calculating': Trump Defends His Mathematically Impossible Calculations on Drug Prices – Will Weissert, Associated Press
• Asia's Spiraling Supply Shock Is Coming for America – David Goldman, CNN
• Inside the Development Finance Corporation's New $205 Billion Bet – Josh Rogin, Washington Post
• A Dispiriting Airline Bailout – Editorial Board, Wall Street Journal
• They're Rich but Not Famous-and They're Suddenly Everywhere – Rachel Louise Ensign, Wall Street Journal
• Trump's Last Chance to Fix the Navy – Editorial Board, Wall Street Journal
• America Is Losing Its Most Valuable Resource: People – George F. Will, Washington Post