US Department of Justice closes criminal probe into Federal Reserve chair Jerome Powell
The decision follows a judicial ruling that found the prosecution lacked evidence to support subpoenas regarding cost overruns on the central bank's Washington headquarters renovations.
The United States Department of Justice has officially ended its criminal investigation into Federal Reserve chair Jerome Powell, a move that removes a significant political obstacle to the Senate confirmation of his successor, Kevin Warsh. US Attorney Jeannine Pirro announced the closure of the probe on Friday, citing the Federal Reserve's Office of the Inspector General as the appropriate body to scrutinise the central bank's Washington headquarters renovations.
Pirro stated that the Inspector General possesses the authority to hold the Federal Reserve accountable to American taxpayers and expressed confidence that a comprehensive report would be delivered in short order. This transfer of responsibility is expected to resolve the questions that initially led the Department of Justice to issue subpoenas, potentially allowing for a swift confirmation vote by the Senate.
The decision to drop the case follows a judicial ruling by Judge James Boasberg, who previously quashed the subpoenas due to a lack of evidence against Powell. In his ruling, the judge noted that prosecutors had produced essentially zero evidence to suspect Powell of a crime and described the government's justification for the investigation as thin and unsubstantiated.
Senator Thom Tillis had indicated he would oppose Warsh's confirmation until the investigation was resolved, effectively blocking the nomination. With the criminal probe now closed, the path for Warsh, a former top Fed official nominated by President Donald Trump, appears clearer. Warsh reaffirmed his commitment to independence during a Senate hearing, stating the President never asked him to commit to specific interest rate decisions.
The Department of Justice's withdrawal from the case represents a notable pullback from its aggressive stance over the last year to prosecute public figures opposed by the President. While the underlying allegations of cost overruns remain under the purview of the Inspector General, the absence of a criminal investigation allows the leadership transition at the world's leading central bank to proceed without the immediate threat of legal proceedings.
Democrats have continued to question Warsh's independence and transparency, with Senator Elizabeth Warren raising concerns about his potential alignment with the White House. However, the removal of the DOJ probe distinguishes this confirmation process from previous high-profile investigations, shifting the focus entirely to the Senate's evaluation of Warsh's qualifications and the Inspector General's subsequent findings.
