The criminal investigation into Federal Reserve Chair Jerome Powell produced “essentially zero evidence,” according to the judge who reviewed it. On Friday, the Justice Department dropped it anyway.

The timing tells you everything. US Attorney for the District of Columbia Jeannine Pirro announced on X that her office was closing its probe into the Fed’s headquarters renovation project, referring the matter to the Fed’s own Office of Inspector General instead. The announcement comes with Kevin Warsh — President Donald Trump’s nominee to replace Powell — awaiting Senate confirmation, and Powell’s term as chair expiring May 15.

An Investigation That Never Found Its Footing

The DOJ probe centered on cost overruns — in the billions, per Pirro — tied to the Fed’s extensive renovation of its Washington headquarters. From the start, prosecutors struggled to articulate a basis for criminal conduct.

At a closed-door hearing in March, a prosecutor conceded the government had not yet found evidence of a crime. Judge James Boasberg subsequently quashed subpoenas issued to the Federal Reserve, calling the justification “thin and unsubstantiated.” Boasberg said prosecutors had produced “essentially zero evidence” to suspect Powell of wrongdoing.

Prosecutors later made an unannounced visit to a Fed construction site. They were turned away. A defense lawyer in the case called the maneuver “not appropriate.”

The Fed’s inspector general had already reviewed the renovation project twice, according to NPR. Both reviews found no wrongdoing.

Pirro framed the handoff as accountability. “The Inspector General has the authority to hold the Fed accountable to American taxpayers,” she wrote on X. “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.”

Referring a matter to an internal watchdog that has already cleared it twice is an unusual way to resolve anything “once and for all.”

The Political Math

The investigation’s closure removes what had become a real obstacle to confirming Warsh, a former top Fed official nominated by Trump in January.

Republican Senator Thom Tillis of North Carolina had threatened to block Warsh’s confirmation unless the Justice Department dropped its investigation into Powell, according to NPR. The calculation was straightforward: pursuing a criminal case against the sitting Fed chair — one that judges had already gutted — risked politicizing the confirmation fight in ways that could cost Republican votes.

Now the path is clearer. The Senate can move to confirm Warsh without the shadow of an investigation that was, by the government’s own admission in court, unsupported by evidence.

The Leverage Served Its Purpose

The Powell investigation was one of several the Justice Department launched against Trump’s perceived adversaries, according to the South China Morning Post. Its value was never in proving a case in court. It was in the cloud it cast — over Powell’s final months in the role, over the Fed’s institutional independence, and over anyone in Washington who might consider crossing the White House on monetary policy.

That cloud is now being lifted, not because the facts changed, but because the political calendar moved forward. Warsh is the nominee. The investigation has served its purpose and is being shelved.

What the World Is Watching

Central bank independence is under pressure far beyond Washington. The European Central Bank, the Bank of Japan, and the Bank of England have all faced varying degrees of political encroachment in recent years. A Trump-appointed Fed chair whose confirmation path was cleared, in part, by the quiet retirement of a politically motivated investigation sends a signal that markets from Frankfurt to Tokyo will have to price in.

The US Federal Reserve sets the benchmark for global monetary policy. When the process for choosing its leadership looks like this, the credibility cost does not stay within American borders.

Powell’s term ends May 15. The Senate is expected to move quickly.

Sources