U.S. Attorney Jeanine Pirro announced she has shut down the Justice Department's criminal investigation into Federal Reserve Chairman Jerome Powell, but not before making clear the door remains open to restarting it. The move hands the politically charged matter to the Fed's own inspector general, who will now examine whether cost overruns on the central bank's massive headquarters renovation warrant further scrutiny.
Pirro posted the announcement on X, writing that she directed her office to close the investigation while the inspector general undertakes a review. But she added a pointed warning.
"Note well, however, that I will not hesitate to restart a criminal investigation should the facts warrant doing so."
The decision lands at a moment when the investigation had become a political liability. A federal judge had already dismantled the probe's legal footing, quashing grand jury subpoenas and accusing prosecutors of having no real evidence of a crime. And the investigation had become an obstacle to confirming Kevin Warsh, President Trump's pick to succeed Powell as Fed chairman.
The criminal investigation burst into public view in January, when Powell revealed in a video that the Fed had received grand jury subpoenas. The probe centered on the renovation of two buildings at the Fed's Washington, D.C., headquarters, a project first approved in 2017 whose estimated cost ballooned from $1.9 billion to nearly $2.5 billion.
Pirro's office wanted to know whether Powell misled Congress about those overruns when he testified before the Senate Banking Committee in June 2025. But the probe ran into a wall almost immediately. In March, Chief Judge James Boasberg of the U.S. District Court for the District of Columbia quashed the pair of subpoenas, ruling they were a pretext to pressure Powell into voting to lower interest rates or resigning.
The Justice Department asked Boasberg to reconsider. He refused earlier this month. Prosecutors did not take the fight to the federal appeals court in Washington.
What happened inside the sealed courtroom made the collapse even more striking. At a closed-door hearing on March 3, Assistant U.S. Attorney Andrew Massucco, a top deputy in Pirro's office, conceded that prosecutors did not know what false statements Powell had allegedly made before Congress. A transcript of the sealed proceeding, reported by the Associated Press, showed Massucco's admission when pressed on the evidence.
"Well, we don't know is my first answer," Assistant U.S. Attorney Andrew Massucco said when asked what false statements Powell made before Congress.
When the judge asked about evidence of fraud or criminal misconduct tied to the cost overruns, Massucco offered a remarkable answer: "Again, we do not know at this time. However, there are 1.2 billion reasons for us to look into it."
Boasberg was unmoved. He wrote that the government had produced "essentially zero evidence" to suspect Powell of a crime. Newsmax reported that the judge went further, noting that most members of the Senate committee Powell testified before, including a majority of each party's members and the committee's chair, had said they did not believe Powell committed any crime.
The probe had become more than a legal embarrassment. It was blocking the confirmation of Kevin Warsh, the president's nominee to lead the Fed. Republican Sen. Thom Tillis of North Carolina said he would not vote to confirm any nominee until the investigation was dropped.
Warsh testified before the Senate Banking Committee on Tuesday, pledging that the central bank would remain "strictly independent" in its monetary policy decisions. The White House projected confidence that Warsh's confirmation would proceed. Spokesman Kush Desai framed the shift as a win for accountability.
"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."
That framing, that the inspector general has stronger tools than prosecutors, is worth examining. The Fed's Office of the Inspector General said it has been evaluating the renovation project since last July, including an independent analysis of what it called "substantial cost increases and overruns." The office said it is "actively working to complete our review, and look forward to making the results available to the public and Congress upon completion."
The inspector general, Michael Horowitz, is a familiar name in Washington. He previously served in the same role at the Justice Department, where he reviewed the origins of the FBI's investigation into the 2016 election and alleged ties between the Trump campaign and Russia. His work there earned both praise and criticism from both sides of the aisle.
The renovation itself is real, and the cost increases are not in dispute. The Fed said the jump from $1.9 billion to nearly $2.5 billion resulted from changes to original building designs after consultations with review agencies, rising costs of materials, equipment, and labor, and unforeseen conditions, including soil contamination and more asbestos than initially expected.
The Fed has also noted that it is self-funded and not reliant on taxpayer dollars. The renovations, first approved in 2017, are set to be completed next year. Powell told the Senate last year that he asked the internal watchdog to "take a fresh look at the project."
Pirro's office had pushed harder. Days before the announcement, two prosecutors and an investigator from the U.S. Attorney's Office in D.C. made an unannounced visit to the Fed's headquarters and attempted to gain access to the ongoing renovations. They were denied entry. Pirro, who has also been active on other fronts, including moves to interview accusers in the Swalwell case, told reporters at a press conference on Wednesday that "this investigation continues."
She also said she is appealing Boasberg's ruling, even as the criminal investigation itself has been closed. "I am in the legal lane, there are others that are in the political lane. I don't intersect those two lanes," Pirro said.
Powell's tenure as Fed chairman is set to end in May, though he can remain a governor on the Fed's Board until early 2028. President Trump has frequently aired frustrations with Powell for declining to rapidly cut interest rates. He called Powell "a jerk" and said his actions were "too late." He also threatened to fire Powell earlier this month and suggested last year that the renovation overruns could be grounds for removal.
The broader reshaping of the Justice Department under the current administration has drawn intense scrutiny. Pirro's handling of this probe will be part of that debate. ABC News first reported Friday that the Justice Department was set to drop the investigation.
The Fed declined to comment on the closure of the probe. Meanwhile, legal battles in D.C. courts over prosecutorial overreach continue to multiply, raising questions about the boundaries of federal investigative authority.
There is nothing wrong with asking hard questions about a $600 million cost overrun at a federal institution. Taxpayers, even if the Fed claims self-funding, have every right to demand transparency from the central bank. The instinct behind the probe was sound: government institutions should not be above scrutiny.
But a criminal investigation requires evidence of a crime. Pirro's office launched subpoenas without being able to identify what false statements Powell made. A federal judge said prosecutors offered "essentially zero evidence." A top deputy admitted in a sealed hearing that the office did not know what criminal conduct it was investigating. That is not accountability. That is a fishing expedition with a badge.
The inspector general route is the right call, and it should have been the first call. Horowitz's office has been on the case since last July. It has the institutional knowledge, the access, and the mandate to produce a thorough public report. If there is mismanagement or worse, a competent IG review will find it. If there is not, the country will know that too.
The probe's collapse also removed a needless obstacle to Warsh's confirmation. Whatever one thinks of the Fed's independence, holding a nominee hostage to an investigation built on nothing was never going to produce good policy or good governance.
When you go after the chairman of the Federal Reserve with grand jury subpoenas, you had better have the goods. Pirro didn't. The facts matter more than the fight.
