The Justice Department on Friday dropped a criminal investigation into Federal Reserve Chairman Jerome Powell, removing a major hurdle to the Senate’s confirmation of Kevin Warsh’s nomination to replace President Donald Trump.
Jeanine Pirro, the top U.S. attorney for the District of Columbia, said she was abandoning the investigation after posting about X. Her announcement came three days after Warsh testified about her nomination before the Senate Banking Committee.
Pirro said just Wednesday that he intends to continue the criminal investigation, even though a federal judge’s ruling revoking a subpoena his office issued to the Feds precludes the investigation.
Sen. Thom Tillis, a Republican from North Carolina and a member of the Banking Committee, effectively controlled the full Senate vote to confirm Mr. Warsh as Fed chairman until the criminal investigation is concluded.
In announcing the closure of the investigation, Pirro said the Federal Reserve’s inspector general, not his office, was “requested this morning” to investigate cost overruns in the multibillion-dollar renovation of the central bank’s headquarters in Washington.
He argues that Mr. Powell’s testimony before the Banking Committee about the project, which the Fed IG has been investigating since last summer, gave him reason to investigate the Fed director.
Federal Reserve Chairman Jerome Powell speaks during a press conference after the Federal Reserve Board’s Federal Open Market Committee meeting on October 29, 2025 in Washington, DC.
Alex Wong | Getty Images
Powell and others have said the real reason for Pirro’s investigation was to pressure him and the Fed to cut interest rates in line with President Trump’s wishes.
Powell asked the inspector general to review the renovation plan in July 2025 after President Trump criticized the renovation costs.
He noted at the time that the IG conducted an audit in 2021 that evaluated the Fed Board’s “planning and management of multiple renovation projects and the process for procuring services under various renovation-related contracts.”
In a statement to CNBC on Friday, an IG spokesperson said the agency is “actively working” to complete an “evaluation of the Board’s building renovation projects” and will share its findings with the public and Congress once the investigation is complete.
Mr. Pirro’s warning
“The IG has the authority to hold the Federal Reserve accountable to the American taxpayer,” Pirro said in the X post.
“I look forward to a comprehensive report soon and am confident that its findings will help this agency fully resolve the questions that led it to issue the subpoena,” she said.
“Accordingly, I have directed my office to close the investigation as the IG conducts this investigation,” Pirro said.
“However, please note that I will not hesitate to reopen a criminal investigation if the facts warrant it.”
Federal Reserve Board Chair candidate Kevin Warsh arrives for his confirmation hearing before the Senate Banking, Housing and Urban Affairs Committee in the Dirksen Building on April 21, 2026.
Tom Williams | Cq-roll Call Inc. | Getty Images
“America’s taxpayers deserve answers for the Federal Reserve’s fiscal mismanagement, and the more powerful authorities in the Office of Inspector General are best positioned to get to the bottom of the matter,” White House Press Secretary Khush Desai said in a statement.
“The White House remains confident as ever that the Senate will quickly confirm Kevin Warsh as the next Fed Chair, ultimately restoring competency and confidence in the Fed’s decision-making,” Desai said.
The Fed declined to comment.
CNBC has reached out to Pirro’s office, Warsh, Tillis, Senate Banking Committee Chairman Tim Scott, R.S.C., and other members of the committee for comment.
Earlier this week, Scott, R.S.C., advocated closing the criminal investigation and referring the matter to Congress.
In an interview with CNBC, Scott said shifting responsibility for the investigation from Pirro’s office was essential to confirming Warsh as chairman, adding that findings on the renovations could be made public after the review is complete.
Mr. Scott suggested that the Banking Committee could work with the House Financial Services Committee to “establish a committee with permanent oversight of construction projects within the jurisdiction of the Banking Committee.”
“Wherever that leads us, we should go. If that leads to criminal charges, so be it,” Scott said. “But give Kevin Warsh at the Fed access to all the information he needs.
Scott also said he believes Powell is “not incompetent and not a criminal.”
Warren’s backlash
Sen. Elizabeth Warren (Massachusetts), the top Democrat on the Banking Committee, said abandoning the Powell investigation is “nothing more than an attempt by Senate Republicans to clear the way for President Trump’s puppet Kevin Warsh to become Fed Chairman.”
“Let me be clear about what the Department of Justice announced today: Instead of dropping its ridiculous criminal investigation against Governor Lisa Cook, it has threatened to reopen a bogus criminal investigation against Fed Chairman Jerome Powell at any time,” Warren said.
Last summer, President Trump called for Cook, who like Powell had resisted calls for rate cuts, to be fired after administration officials claimed he had made false statements on mortgage applications.
Mr. Cook denied these allegations and filed a lawsuit seeking an injunction against his dismissal. She remained on the Fed board while the Supreme Court considered her case.
“Anyone who believes Donald Trump’s corrupt plan to take over the Fed is over is fooling themselves,” Warren said. “The Senate should not move forward with Kevin Warsh’s nomination.”
—CNBC’s Jeff Cox, Kevin Breuninger, Matt Peterson, Betsy Spring and Emily Wilkins contributed to this article.
