WASHINGTON, D.C. — The Justice Department dropped its criminal investigation into the Federal Reserve and its chair, Jerome Powell, over a renovation project at the central bank's Washington, D.C., headquarters. U.S. Attorney for the District of Columbia Jeanine Pirro directed her office to close the inquiry as the Federal Reserve's Inspector General undertakes a review of the project's cost overruns.

"I will not hesitate to restart a criminal investigation should the facts warrant doing so," Pirro said. White House spokesman Kush Desai said, "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 criminal probe centered on the renovation of two historic buildings owned by the Federal Reserve that had not been comprehensively renovated since their construction in the 1930s. The initial cost estimate for the project was around $1.9 billion and later rose to about $2.5 billion. The Federal Reserve attributed the increases to unforeseen changes to plans, rising costs of raw materials, equipment and labor, additional asbestos found on site, and a sinkhole.

The Inspector General had previously reviewed the project twice and found no wrongdoing. Powell asked for another review in 2025 after President Donald Trump and his top allies applied pressure. Trump toured the construction site in summer 2025 with Federal Housing Finance Agency Chief Bill Pulte, Senate Banking Committee Chair Tim Scott, and other White House officials.

In March, a prosecutor conceded at a closed-door court hearing that the government had not found any evidence of a crime. Chief Judge James Boasberg quashed subpoenas issued to the Federal Reserve that month, saying prosecutors had produced "essentially zero evidence" to suspect Powell of a crime and describing their justification as "thin and unsubstantiated." Prosecutors also made an unannounced visit to the headquarters construction site but were turned away.

The Federal Reserve declined to comment on Pirro's announcement. The closure clears the way for Kevin Warsh, Trump's nominee to chair the Federal Reserve, to advance toward a confirmation vote in the Senate. Senator Thom Tillis had blocked Warsh's confirmation over the investigation into Powell.

Desai added, "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."