Legal

DOJ Drops Powell Probe, Smoothing Warsh Path to Fed

Bloomberg Markets and Finance
Bloomberg Markets and Finance•Apr 24, 2026

Why It Matters

The outcome will dictate whether the Federal Reserve’s leadership remains intact and influences a key Senate confirmation, affecting monetary policy continuity and political dynamics.

Key Takeaways

  • •DOJ closes probe into Fed’s $2.6 bn building overruns
  • •Inspector General now leads audit; findings could revive criminal case
  • •Jeanine Pirro signals possible restart if investigation uncovers wrongdoing
  • •Senate’s confirmation of Kevin Warsh hinges on Tillis’s response
  • •Powell’s legal exposure remains limited unless IG report finds violations

Summary

The Justice Department announced it is ending its criminal investigation into Federal Reserve Chairman Jay Powell’s involvement in a $2.6 billion construction project, effectively clearing the path for the Senate’s pending confirmation of Kevin Warsh. The move follows a meeting between former prosecutor Jeanine Pirro and Acting Attorney General Todd Blanch, after which the DOJ deferred to the Fed’s Inspector General to conduct a comprehensive audit of the cost overruns. Key data points include the massive $2.6 billion budget, the Inspector General’s new mandate to scrutinize the project, and Pirro’s public pledge that the department “will not hesitate to restart a criminal investigation should the facts warrant.” While the DOJ’s closure removes immediate legal pressure on Powell, the IG’s findings could still trigger renewed action. Pirro emphasized, “I expect a comprehensive report in short order, and I am confident the outcome will assist in resolving once and for all the questions that led this office to issue subpoenas.” The discussion also highlighted Senator Thom Tillis’s role; his assessment of the IG report may determine whether the Banking Committee advances Warsh’s nomination. The broader implication is a potential shift in Fed governance. If the IG report finds no wrongdoing, Powell’s position stabilizes and Warsh’s confirmation proceeds, reinforcing the current monetary policy direction. Conversely, any adverse findings could resurrect legal threats, destabilize the Fed’s leadership, and alter the Senate’s confirmation calculus.

Original Description

The Justice Department is ending a controversial investigation into building-renovation cost overruns by the Federal Reserve, potentially clearing a path to confirmation for Kevin Warsh, President Donald Trump’s pick to be the next Fed leader.
US Attorney Jeanine Pirro said in a social media post Friday that the Fed Inspector General had been asked to scrutinize the cost overruns. She said she expects a report soon on the findings. Bloomberg International Economics and Policy Correspondent Mike McKee joins Paul Sweeney and Scarlet Fu on 'Bloomberg Intelligence' to discuss what happens next.
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