Justice Department drops criminal probe of Fed chair Powell, likely
clearing the way for Warsh
[April 25, 2026]
By CHRISTOPHER RUGABER and ERIC TUCKER
WASHINGTON (AP) — The Justice Department has ended its investigation
into Federal Reserve chair Jerome Powell, clearing a major roadblock to
the confirmation of Kevin Warsh as his successor.
U.S. Attorney for the District of Columbia Jeanine Pirro said on X
Friday that her office was ending its probe into the Fed’s extensive
building renovations because the Fed’s inspector general would
scrutinize them instead.
The move could lead to a swift confirmation vote by the Senate for Warsh,
a former top Fed official whom President Donald Trump, a Republican,
nominated in January to replace Powell. Powell's term as chair ends May
15. Sen. Thom Tillis, a North Carolina Republican, had said he would
oppose Warsh until the investigation was resolved, effectively blocking
his confirmation.
Republicans praised Warsh during a Tuesday hearing even as Democrats
questioned his independence from Trump, the lack of transparency around
some of his financial holdings, and what they said was his flip-flopping
on interest rates. Still, Trump's previous appointment to the Fed's
board of governors, Stephen Miran, was approved by the full Senate just
13 days after his nomination.
Investigation lacked evidence, a court says
Pirro’s investigation focused on a $2.5 billion building renovation that
Trump criticized sharply last year for its cost overruns. Trump visited
the building last July and on camera presented to Powell an inflated
cost estimate, which Powell corrected as the two stood at the
construction site in hard hats.
Earlier estimates for the project had put the cost at $1.9 billion. The
investigation also covered Powell’s brief testimony about the renovation
before the Senate Banking Committee last June.
Pirro also said on X, “I will not hesitate to restart a criminal
investigation should the facts warrant doing so.” Powell has previously
asked the Fed’s independent inspector general to investigate the cost
overruns.
The probe was among several undertaken by the Justice Department into
Trump’s perceived adversaries. For months it had failed to gain traction
as prosecutors struggled to articulate a basis to suspect criminal
conduct. Other efforts by the department to prosecute Trump's
adversaries, including New York state Attorney General Letitia James, a
Democrat, and former FBI Director James Comey, have also been
unsuccessful.
A prosecutor handling the Powell case conceded at a closed-door court
hearing in March that the government hadn’t found any evidence of a
crime, and a judge subsequently quashed subpoenas issued to the Federal
Reserve. The judge, James Boasberg, said prosecutors had produced
“essentially zero evidence” to suspect Powell of a crime. Boasberg
branded prosecutors’ justification for the subpoenas as “thin and
unsubstantiated.”
The investigation was the most brazen attempt yet by the Trump
administration to pressure the Fed to cut its short-term interest rate,
which indirectly affects other borrowing costs for mortgages, auto loans
and business loans. Trump has obsessively attacked Powell for not
cutting the rate from its current level of about 3.6% to 1%, a level
that no Fed official supports.
Probe was intended to intimidate the Fed, Powell says
Instead, Fed policymakers, including Powell, have said they want to keep
rates unchanged while they evaluate the impact of the Iran war, which
has sent gas prices soaring, pushing up inflation. The increase could be
a one-time shift but could also lead to more sustained inflation. The
Fed seeks to restrain rising prices by keeping interest rates high,
cooling borrowing and spending.
Powell said in January that the investigation was not really about the
renovation or his testimony but “is a consequence of the Federal Reserve
setting interest rates based on our best assessment of what will serve
the public, rather than following the preferences of the President.”
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Federal Reserve Chair Jerome Powell addresses students at Harvard
University, March 30, 2026, in Cambridge, Mass. (AP Photo/Charles
Krupa, File)
More recently, prosecutors made an unannounced visit to a
construction site at the Fed’s headquarters but were turned away,
drawing a rebuke from a defense attorney in the case who called the
maneuver “not appropriate.”
Warsh has promised to be independent
Warsh said during a hearing by the Senate Banking Committee on
Tuesday that he never promised the White House that he would cut
interest rates, even as the president renewed his calls for the
central bank to do so.
“The president never once asked me to commit to any particular
interest rate decision, period,” Warsh said under questioning by the
Senate Banking Committee. “Nor would I ever agree to do so if he
had."
Warsh’s comments came just hours after Trump, in an interview on
CNBC, was asked if he would be disappointed if Warsh didn’t
immediately cut rates and responded, “I would.”
Massachusetts Democratic Sen. Elizabeth Warren said during the
hearing that Warsh would be a “sock puppet” for Trump. When she
asked if Trump had won the 2020 presidential election — which he
lost to Democrat Joe Biden but incorrectly claims was decided by
fraud — Warsh said only that the Senate had certified Biden as the
winner. When asked for an example of an economic policy on which he
disagreed with Trump, Warsh did not name one.
Robert Hur, an attorney for the Federal Reserve Board of Governors,
didn’t immediately respond Friday to an email seeking comment.
Trump sought more control over the Fed
Trump has taken other unprecedented steps to try to pressure the
Fed, including an attempt last August to fire Lisa Cook, a member of
the Fed's governing board, who was appointed by Biden. Yet courts
have temporarily blocked the firing, and, at an oral argument in
January, the Supreme Court appeared sympathetic to the argument that
Cook should keep her job.
A key question still to be resolved is whether Powell will remain on
the Fed's board even after his term as chair expires next month.
Powell, who serves a separate term as a governor that lasts until
January 2028, has said he wouldn't leave until the investigation was
dropped. Yet he did not promise to do so if it was. By remaining on
the board, Powell would deprive Trump of the opportunity to fill
another seat among its seven members, three of whom are Trump
appointees.
Other presidents have pressured the Fed to keep borrowing costs low,
notably Presidents Lyndon Johnson and Richard Nixon, though rarely
as publicly as Trump. Johnson’s and Nixon’s demands for lower rates,
however, are considered key contributors to the 15-year outbreak of
high inflation that only ended in the early 1980s after then-chair
Paul Volcker ratcheted the Fed's rate to an eye-watering 20%.
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Associated Press writers Michael Kunzelman and Alanna Durkin Richer
contributed to this report.
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