The Justice Department has dropped its criminal investigation into Federal Reserve Chair Jerome Powell over cost overruns on the central bank’s headquarters renovation project.
U.S. Attorney for the District of Columbia Jeanine Pirro (R-N.Y.) announced Friday that her office is closing the probe and referring the matter to the Federal Reserve’s Inspector General. The move comes as President Donald Trump seeks to install a successor at the Fed.
Pirro stated in a post on X: “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. The IG has the authority to hold the Federal Reserve accountable to American taxpayers. 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.”
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.
The IG has the authority to hold the Federal Reserve accountable to American taxpayers. I…
— US Attorney Pirro (@USAttyPirro) April 24, 2026
This development likely clears the way for confirmation of Powell’s successor, Kevin Warsh, reported the Associated Press.
The Federal Reserve, created by Congress in 1913, serves as the central bank of the United States. It conducts monetary policy, supervises banks, maintains financial stability, and provides certain financial services. Its headquarters, including the historic Marriner S. Eccles Building, are undergoing major renovations.
The renovation project for the two main buildings was originally estimated at about $1.9 billion but has grown to approximately $2.5 billion, with completion expected in 2027, reported Bloomberg. Factors cited for the increases include asbestos remediation, soil contamination, a higher-than-expected water table, rising material and labor costs, and design changes to comply with historic preservation requirements.
The Federal Reserve is self-funded through interest on securities it holds and fees for services provided to banks, per Fortune. It does not receive direct taxpayer appropriations for operations or these renovations. Any surplus earnings are returned to the U.S. Treasury.
Pirro’s office opened the criminal inquiry in late 2025, focusing on whether Powell’s public statements about the project costs were accurate and examining spending records. Prosecutors issued subpoenas and, in one instance, made an unannounced visit to the construction site. A federal judge later quashed some subpoenas, per CBS News.
The Inspector General for the Federal Reserve Board and Consumer Financial Protection Bureau, currently Michael E. Horowitz, conducts independent audits and investigations of the agency’s programs and operations. Horowitz, a longtime government watchdog with prior experience at the Department of Justice Inspector General’s office, was appointed to the Fed role in 2025.
The decision to close the criminal probe removes one potential obstacle to confirming a new Fed chair. President Donald Trump has nominated Kevin Warsh (R-Calif.), a former Federal Reserve governor (2006–2011), to succeed Powell as Fed Chair.
