Jeanine Pirro, the US Attorney for the District of Columbia, said Friday she is closing the criminal probe of Federal Reserve Chair Jerome Powell.
That would clear the way for Kevin Warsh, President Donald Trump’s pick to succeed Powell, to get confirmed for the role. Powell’s term helming the central bank is set to expire on May 15, and Warsh appeared before the Senate Banking Committee for a confirmation hearing earlier this week. However, one key senator on the committee vowed to block the vote unless the DOJ dropped the investigation into Powell.
The Department of Justice launched a criminal investigation into the Fed chair in January after Trump spent months railing against Powell for not lowering interest rates faster. Trump’s complaints included accusations of impropriety and incompetence in cost overruns at the central bank’s ongoing multibillion-dollar renovation project at its Washington, DC, headquarters.
A federal prosecutor in Washington, DC, told a judge last month that his office didn’t have evidence of any crimes, but Pirro continued the probe and Trump said he supported the investigation.
The DOJ probe stoked fears that the Trump administration was trying to chip away at the Fed’s independence, which would pave the way for political interference in setting interest rates for the world’s largest economy.
Republican Senator Thom Tillis, who sits on the banking committee that approves Fed nominees, has been blocking a vote for Warsh because of the probe, which he described as “frivolous.” Once the probe ended he said, he would vote to confirm Warsh.
The move to abandon the investigation comes after weeks of private pleas from Senate Republicans that grew increasingly public.
The probe imperiled both Warsh’s nomination and Powell’s tenure at the Fed, throwing the future leadership of America’s central bank into doubt.
Powell had said that if a replacement hadn’t been named by the end of his term on May 15, Powell would remain as Fed chair “pro tem” in the interim.
That was unsatisfactory to Trump, who has wanted to oust Powell for years. Last week, Trump threatened to fire Powell if he refused to step down at the end of his term.
But that threat injected more chaos into the already fraught situation. Firing Powell would have kicked off a lengthy legal faceoff with Powell that could have prolonged the tenure of Trump’s unwanted Fed chair.
Dropping the probe is an abrupt left-turn for an administration that appeared to be doubling down on the investigation.
On Tuesday, Trump suggested that Powell was profiting from the renovations. “I can’t imagine that ‘Too Late’ is taking money on construction. I can’t. But it’s possible,” he said, using his nickname for the head of the central bank. “But we have to find out.”
The renovation project includes buildings that “needed a lot of work,” Powell told senators last year in his semiannual testimony. The Fed’s main Eccles building in particular, Powell said, hadn’t had a serious renovation since it opened in the 1930s. “It was not really safe, and it was not waterproof.”
On its website, the Fed has posted video of water pouring into the building’s basement in 2017 and asbestos abatement during the renovation.
And in a lengthy FAQ, the Fed laid out many of the details for the cost overruns on its renovation project: Asbestos abatement, a higher-than-expected water table and the rising cost of some raw materials contributed to the spiraling cost, it explained.
“No one in office wants to do a major renovation of a historic building during their term,” Powell told senators at the time. “You much prefer to leave that to your successors — and this is a great example why,” he said, referring to the current backlash. “But we decided to take it on.”
This is a developing story and will be updated.