The U.S. Justice Department may have dealt a blow to President Donald Trump with the decision to stop its investigation against Jerome Powell and the Federal Reserve.
“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,” U.S. Attorney for D.C. Jeanine Pirro said in a post on X.
“Accordingly, I have directed my office to close our investigation as the IG undertakes this inquiry.”
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As per NBC News, the inspector general for the Federal Reserve has already reviewed the project twice, and found no wrongdoing. It was asked again to review the project in 2025 by Powell, amid unrelenting pressure from President Trump and his top allies.
The silver lining for Trump in this scenario could be that the dropped investigation might clear the way for Trump’s nominee to chair the Fed, Kevin Warsh, to advance toward a confirmation vote in the Senate.
“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,” White House Spokesman Kush Desai said in a statement.
“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,” Desai added.
As per NBC News, Trump has repeatedly pressured Powell to support sharp cuts to benchmark interest rates set by the Federal Open Market Committee, while also attacking Powell with accusations that he favors Democrats in monetary policy decisions.
He has criticized Powell for years, and tensions escalated further during a summer visit to a Federal Reserve construction site attended by housing official Bill Pulte and Senator Tim Scott, along with other White House figures.
During the visit, Trump challenged Powell over renovation costs, claiming they had risen to about $3.1 billion, a figure Powell publicly disputed on live television, stating he had not heard that estimate.
The dispute was compounded by criticism from White House budget director Russell Vought, who compared the project to the Palace of Versailles and accused Powell of fiscal mismanagement, even though the renovation had been approved in 2017 before Powell became chair.
Amid rising political pressure, the Fed released a rare statement after subpoenas were issued by Pirro’s office, warning that the actions should be viewed in the broader context of political pressure on the central bank and threats to its independence.
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Following this, Senate Republican Tim Scott blocked Fed nominees, stating that no official is above the law, while Powell defended the institution, arguing the subpoenas were part of ongoing attempts to influence interest rate policy.
A federal judge later blocked the subpoenas, finding insufficient evidence of wrongdoing and suggesting they were used to exert pressure politically.