WASHINGTON — The Department of Justice dropped its investigation Friday of the Federal Reserve and Chair Jerome Powell over building renovation costs, a move that could open the door for new Fed leadership next month — and signaled a victory for North Carolina Sen. Thom Tillis.

U.S. Attorney Jeanine Pirro said her office closed the probe after a request to the Fed’s inspector general to examine the cost overruns.

“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,” Pirro wrote on X just after 10 a.m. Eastern.

Pirro said she “will not hesitate to restart a criminal investigation should the facts warrant doing so.”

Powell, whose term expires in May, has been the target of repeated public criticism from President Donald Trump, who threatened to fire the central bank’s chair if he did not lower interest rates.

The Trump administration’s criminal inquiry into Powell for a $2.5 billion renovation project at the Fed’s offices has been eyed with suspicion, including from his own party.

Tillis, R-N.C., said he would not vote for Trump’s pick to replace Powell, former Fed Board Governor Kevin Warsh, unless the administration dropped its “bogus” investigation.

A favorable vote by Tillis on the closely divided Senate Committee on Banking, Housing and Urban Affairs is necessary to advance Warsh’s nomination, as all panel Democrats oppose him.

Tillis’s office did not immediately respond for comment.

A federal judge last month blocked the administration’s subpoenas to probe the Fed and Powell.

The Department of Justice declined to comment and referred States Newsroom to Pirro’s social media post.

A White House official reaffirmed Pirro’s announcement Friday.

“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. The White House remains as confident as before that the Senate will swiftly confirm Kevin Warsh as the next Federal Reserve Chairman to finally restore competence and confidence in Fed decision-making,” White House spokesperson Kush Desai told States Newsroom in a statement.

Sen. Elizabeth Warren, D-Mass., issued a statement dismissing the DOJ’s announcement as “an attempt to clear the path for Senate Republicans to install President Trump’s sock puppet Kevin Warsh as Fed Chair.”

“Let’s be clear what the Justice Department announced today: they threatened to restart the bogus criminal investigation into Fed Chair Powell at any time while failing to drop their ridiculous criminal probe against Governor (Lisa) Cook. Anyone who believes Donald Trump’s corrupt scheme to take over the Fed is over is fooling themselves,” she wrote on X and Bluesky late Friday morning, referring to Trump’s abrupt August firing of Feb Board Governor Cook over alleged financial fraud.

Cook successfully challenged her firing in two lower courts. The U.S. Supreme Court is reviewing whether Trump legally dismissed Cook. 

Trump, who routinely posts about news of the day on his own social media platform Truth Social, had not commented on the announcement as of 12:30 p.m. Eastern.

During an unrelated Oval Office event Thursday, Trump sidestepped a question about what he hoped to learn from Pirro’s investigation into Powell and the Fed.

Instead, Trump responded by saying he could have completed the Fed’s Washington, D.C., headquarters renovation for $25 million and “had money left over.”

“On top of that, he’s been terrible on interest rates because he should have lowered interest rates. That’s why call him Jerome ‘too late.’ ‘Too late’ — that’s his nickname — Jerome ‘too late’ Powell. He likes me a lot,” Trump said.

Jennifer Shutt contributed to this report.

WASHINGTON — President Donald Trump’s pick to lead the Federal Reserve, Kevin Warsh, vowed Tuesday the central bank would remain “strictly independent” if he’s confirmed to the top spot, even as the president has broadcast his demand for the new Fed chair to lower interest rates.

Warsh, a former Fed board governor, faced questions during his confirmation hearing before the U.S. Senate Committee on Banking, Housing and Urban Affairs, as the clock winds down on the term of current Fed Chair Jerome Powell, who is in Trump’s crosshairs.

Trump’s criminal probe into Powell, over a $2.5 billion renovation project at the Fed’s offices, stands in the way of Warsh’s confirmation on the closely divided committee. 

Sen. Thom Tillis, R-N.C., maintains he will vote against Warsh’s nomination until Trump directs federal prosecutors to halt their “bogus” investigation into one of his most high-profile political foes.

The Senate Banking Committee is made up of 13 Republicans in the majority, and 11 Democrats in the minority. All Democrats plan to oppose the nomination, and with Tillis, a tied vote means Warsh’s nomination would not advance to the full Senate.

The committee’s top Democrat, Sen. Elizabeth Warren of Massachusetts, alleged Trump wants to install a “sock puppet” and “use monetary policies to artificially juice the economy in the short term, and this is his last chance to do that before the November elections.”

Instead of questioning Warsh, Tillis displayed a series of images and figures illustrating the “unfortunate, but legitimate” cost overruns at the Federal Reserve’s Washington, D.C., headquarters. 

“If we put everybody in prison in federal government that had had a budget go over, we’d have to reserve an area roughly the size of Texas for a penal colony,” Tillis said. “… Let’s get rid of this investigation so that I can support your nomination.”

Court action

U.S. District Court Judge James Boasberg, for the District of Columbia, last month blocked the administration’s subpoenas to probe the central bank and Powell, pointing to “a mountain of evidence” that Trump is using the investigation to force Powell to lower interest rates, or resign.

Still, the president has not backed down. One week before Tuesday’s hearing, two investigators from the office of Jeanine Pirro, U.S. attorney for the District of Columbia, showed up unannounced at the Fed’s construction site, according to details reported by the New York Times.

On more than 100 occasions, according to Boasberg’s order, Trump and his allies have made public statements ridiculing Powell and threatening to fire him if interest rates were not lowered.

Powell’s term expires May 15. During a recent press conference, Powell said he plans to stay on, as permitted by Fed regulations, as chair pro tempore until his successor is confirmed.

If Powell stays on, “well then, I’ll have to fire him,” Trump told Fox Business host Maria Bartiromo on April 15. 

A ‘battle-tested’ pick

While Trump’s clash with Powell overshadowed Warsh’s nomination hearing, Republicans largely praised the former board governor, who served from 2006 to 2011.

Senate Banking Chair Tim Scott, R-S.C., said Warsh is “battle-tested” after helping to steer the central bank during the 2008 financial crisis.

“During his first term as governor, he helped our economy through the crisis and restored faith in the economy,”Scott said.

But Democrats questioned Warsh’s ability to remain independent of Trump’s demands, particularly as the president must justify higher costs from tariffs and the Iran war ahead of the 2026 midterm elections, when voters are expected to focus heavily on affordability issues.

Sen. Andy Kim, D-N.J., asked Warsh, “Do you agree that the American families are struggling right now with affordability?”

Largely laying the blame on post-COVID-19 monetary policy decisions under President Joe Biden, Warsh said the Fed bears “some responsibility for the things that you’ve described, and that the legacy of inflation, what I think is the biggest economic policy error in 40 or 50 years, happened just a few years ago, and we’re still living with the with the remnants of it. I think inflation is less problematic than it was a couple of years ago.”

When Kim pressed whether the Fed should be concerned about spiking fuel and fertilizer costs amid Trump’s continuing war in Iran, Warsh said, “Senator, if my reform agenda, if confirmed, stands for anything, it’s for the central bank, especially the Fed chairman, to stay in its lane.”

Lisa Cook firing

Warren and Sen. Angela Alsobrooks, D-Md., also invoked Trump’s contested August 2025 firing of Federal Reserve Board Governor Lisa Cook, currently under review in the U.S. Supreme Court. 

The high court’s oral arguments in January drew a high-profile appearance from Powell. Trump alleged Cook committed financial fraud, but even conservative Supreme Court justices questioned his argument for her firing.

“Will you commit to defending Governor Cook’s tenure as Chairman Powell has done?” Alsobrooks asked.

“Senator, it was a pleasure to meet you in your office, and spend time with you. As I said to you then, I’ll repeat here to the broader committee: If I stand for anything, it’s the Fed should stay in its lane. As I understand that matter, it’s pending before the United States Supreme Court,” Warsh said.

In his opening statement, Warsh defended a president’s right to share opinions on interest rates but told Democratic lawmakers multiple times Tuesday that Trump has not asked him for a commitment.

Following up on an answer Warsh provided earlier during the hearing, Alsobrooks asked, “You said he never — ‘specifically’ is the word you used — demanded that you decrease interest rates. Well, did the president generally suggest this to you as well?”

“I wasn’t trying to be clever. The president never generally or specifically instructed me, or suggested I should commit to any interest rate path whatsoever,” Warsh said.