The US Department of Justice (DOJ) on Friday dropped its criminal investigation into Fed chair Jerome Powell. This move clears a major political obstacle to the Senate considering Kevin Warsh as the next Federal Reserve chair. 

Jeanine Pirro, the top federal prosecutor in the US, announced the move in a post on X. Just days earlier, she had said she would continue the investigation. The probe had already weakened after a federal judge blocked subpoenas issued to the Federal Reserve over a costly renovation of its headquarters, reported AP.

Why was investigation dropped?

Pirro said the Federal Reserve’s inspector general would now take over the review of the project. The renovation, worth billions of dollars, had raised concerns over cost overruns and spending decisions. “The IG has the authority to hold the Federal Reserve accountable to American taxpayers,” Pirro said.

She added that she expected a detailed report soon. “I am confident the outcome will assist in resolving, once and for all, the questions that led this office to issue subpoenas,” she said. Pirro also left the door open for future action. “I will not hesitate to restart a criminal investigation should the facts warrant doing so,” she said.

Some officials said that the investigation aimed to push Powell and the Fed to cut interest rates, a move supported by US President Donald Trump. However, Powell and others rejected that claim.

Does this affect Kevin Warsh’s nomination?

The end of the investigation removes a key barrier in the Senate. Thom Tillis had blocked a vote on Warsh’s nomination while the probe remained open. Tillis sits on the Senate Banking Committee and had demanded that the case be closed before moving forward, reported CNBC.

The White House welcomed the decision. Spokesman Kush Desai said, “American taxpayers deserve answers about the Federal Reserve’s fiscal mismanagement.” He added that the inspector general has stronger powers to uncover the facts. 

“The White House remains as confident as before that the Senate will swiftly confirm Kevin Warsh as the next Federal Reserve Chairman,” he said.

US Senator Tim Scott had earlier urged that the probe shift away from criminal investigators and move to Congress. He said this step would help secure Warsh’s confirmation. “Give us Kevin Warsh at the Fed so that we have access to all the information necessary,” Scott said in an interview.

Scott also shared his view on Powell’s role. He said Powell “was incompetent, not criminal.”