The Department of Justice is preparing to discontinue its criminal probe into Federal Reserve Chair Jerome Powell as soon as Friday, according to people with knowledge of the matter, the reporting said. The expected move would resolve a standoff that had threatened to delay consideration of Powell's successor at the central bank.
Senior officials at the DOJ have recently reached out to senators, including Republican Sen. Thom Tillis of the Senate Banking Committee, to communicate the plan to end the investigation. Rather than pursue further criminal proceedings, the matter involving alleged cost overruns connected to the Fed's Washington headquarters renovation would be handed over to the Federal Reserve's internal watchdog for review.
The Fed's independent inspector general previously audited the renovation costs in 2021. Chair Powell requested that the project - a $2.5 billion renovation of the Fed's Washington headquarters - receive a renewed review last year.
Powell's term as Fed chair is scheduled to end next month. In March, Powell said he would remain in office until President Donald Trump's nominee, Kevin Warsh, is confirmed to lead the central bank.
Ending the DOJ's criminal inquiry is expected to remove a key impediment to Kevin Warsh's confirmation by the Senate. Sen. Tillis told reporters on Tuesday that he supports Warsh as the nominee but has withheld moving the nomination forward while the DOJ probe remains active.
Sen. Tillis has previously framed the situation as raising broader institutional concerns. "If there were any remaining doubt whether advisers within the Trump Administration are actively pushing to end the independence of the Federal Reserve, there should now be none. It is now the independence and credibility of the Department of Justice that are in question," Tillis said in January. "I will oppose the confirmation of any nominee for the Fed -- including the upcoming Fed Chair vacancy -- until this legal matter is fully resolved."
Tillis' resistance has been a significant roadblock for Senate Republican leaders because of his influential position on the closely divided Senate Banking Committee. His opposition, combined with that of all Democrats on the committee, has so far prevented Warsh's nomination from advancing out of committee to a full Senate vote.
Context and implications
The reported decision to refer the alleged renovation cost overruns to the Fed's inspector general rather than continue a criminal inquiry resolves a procedural obstacle that had affected the timing of leadership transition at the central bank. The involvement of senior DOJ officials in communicating the plan to senators underscores the matter's political sensitivity on Capitol Hill.
While the referral would change the venue for further review, the independent inspector general's prior audit in 2021 and Powell's request for an updated review last year remain factual touchpoints in the matter.