Justice Department Closes Investigation
A department spokesperson told CNBC that the Justice Department has decided against reviving its criminal case against Jerome Powell, the former Federal Reserve chair, over the central bank's costly headquarters overhaul. Deputy Attorney General Todd Blanche confirmed in a Friday Bloomberg interview that no criminal investigation into Powell was being reopened. Blanche left open the possibility of other Justice Department steps tied to the renovation, saying an independent audit might trigger an investigation should it turn up signs of criminal conduct.[S1]
Justice Department scrutiny of the renovation began in January, when prosecutors sought related records through grand jury subpoenas. In March a federal judge threw out those subpoenas, concluding they served an improper purpose and that the government had offered virtually no proof Powell had broken the law. Although the DOJ objected to that decision, it ultimately shut down the investigation instead of pursuing an appeal.[S1]
Inspector General Findings and Political Reaction
Word of the closure followed by several days a finding from the Federal Reserve's inspector general that there were no reasonable grounds to think a federal crime had taken place that would require alerting the attorney general. Still, the watchdog criticized the central bank for serious management and oversight lapses that drove the project's ballooning expenses. In a Wednesday Truth Social post, President Donald Trump attacked the outcome, arguing Powell should at the very least be made to step down from the Fed's Board of Governors, adding that Powell is incapable of running a building and should not oversee his high interest rate policy.[S1]
Fed Chairman Kevin Warsh, who took over from Powell in May, said the central bank plans to hire an outside auditor and tighten its supervision of the project. Powell continues to serve on the Fed's Board of Governors, holding a separate term that lasts until Jan. 31, 2028. After years of friction with Powell over interest-rate policy, Trump has repeatedly urged him to give up his board seat entirely.[S1]
