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.”