US Justice Department drops probe into Fed renovations

The US Justice Department announced Friday that it was closing its criminal investigation into alleged cost overruns tied to a Federal Reserve construction project under Chairman Jerome Powell.

"This morning the Inspector General for the Federal Reserve has been asked to scrutinize the building costs overruns – in the billions of dollars – that have been borne by taxpayers," Jeanine Pirro, US Attorney for the District of Columbia, said on US social media company X.

The inspector general has the authority to hold the Federal Reserve accountable to American taxpayers, Pirro said.

"I expect a comprehensive report in short order and am confident the outcome will assist in resolving, once and for all, the questions that led this office to issue subpoenas.

"Accordingly, I have directed my office to close our investigation as the IG undertakes this inquiry. Note well, however, that I will not hesitate to restart a criminal investigation should the facts warrant doing so," Pirro added.

The White House backed Federal Reserve oversight and expressed confidence in Kevin Warsh's nomination.

"American taxpayers deserve answers about the Federal Reserve’s fiscal mismanagement, and the Office of the Inspector General’s more powerful authorities best position it to get to the bottom of the matter," spokesman Kush Desai said.

In early March, US President Donald Trump formally sent the nomination of Warsh to the Senate to serve as the next chairman of the Board of Governors of the FED.

Desai said the administration remains confident that the Senate will “swiftly confirm” Warsh, expressing hope that new leadership would help restore “competence and confidence” in the institution’s decision-making.

Warsh's nomination comes at a time when the Trump administration is pushing for significant economic reforms, including major tax cuts and deregulation.

The nomination is expected to face intense scrutiny in the Senate, where lawmakers will debate the future trajectory of the US central bank's independence and its approach to monetary easing.

Separately, White House spokeswoman Karoline Leavitt told reporters that "the case is not necessarily dropped."

“It’s just being moved over to the Inspector General who has critical tools at their disposal to continue to look into the financial mismanagement at the Fed,” said Leavitt.

She said the investigation continues, adding it is "just under a different authority, and that’s what you’ll continue to see."

Republican Sen. Thom Tillis said he would withhold support for any nominee to the Fed put forward by Trump until the Justice Department ends its investigation into Powell.

Leavitt urged swift confirmation of Warsh.

"Senator Tillis should do the right thing and move to confirm Kevin Warsh as speedily as possible," she said, praising Warsh as "a phenomenal candidate" to lead the Fed.