Justice Department declines to reopen criminal probe of former Fed Chair Powell over renovation cost overruns

The Justice Department will not reopen its criminal investigation into former Federal Reserve Chair Jerome Powell over cost overruns tied to the central bank’s renovation project, closing a legal thread that collapsed in the courts months ago. Attorney General Todd Blanche disclosed the determination in comments to Bloomberg News, which first reported the development on Friday.

The Federal Reserve’s inspector general found no grounds for a criminal referral connected to the project’s cost overruns, a conclusion that aligns with the Justice Department’s determination that the matter does not warrant renewed scrutiny. The watchdog also found no evidence of administrative misconduct tied to the overruns. Blanche did not rule out separate Justice Department action, telling Bloomberg that an independent audit of the renovation could prompt an investigation if it uncovers evidence of criminal wrongdoing. “We’re not reopening a criminal investigation into him,” Blanche said in the interview on Friday.

Inspector general faults oversight but finds no crime

The inspector general’s report, released on Wednesday, faulted the central bank for major management and oversight failures that contributed to the project’s soaring costs. Donald Trump seized on the finding to call for Powell to resign from the Fed’s Board of Governors, issuing the demand in a Truth Social post on Wednesday in which he said Powell should be “forced to resign” from the central bank’s board “at a minimum.” “He can’t manage a Building, and he certainly shouldn’t be allowed to manage his High Interest Rate Policy (only on ‘TRUMP!’),” Trump wrote. Trump has been a vociferous critic of Powell across his two presidencies and has repeatedly pushed him to leave the board altogether after years of clashes over interest-rate policy.

An investigation that collapsed in court

The Justice Department opened its investigation into the renovation in January, issuing grand jury subpoenas seeking related records from the central bank. A federal judge quashed those subpoenas in March, finding they had been issued for an improper purpose and that the government had produced essentially no evidence that Powell committed a crime. The ruling effectively gutted the probe. The DOJ disputed the ruling but later closed its investigation rather than appeal, allowing the case to lapse well before the inspector general completed its own review. By the time the watchdog issued its finding on Wednesday, the criminal inquiry had been dormant for months. The decision not to reopen the probe means the department is accepting that outcome as final, at least unless the forthcoming audit surfaces new evidence that changes the calculus.

Powell stays on the board

Powell stepped down as Fed chair in May and remains on the Fed’s Board of Governors, where his separate term runs through Jan. 31, 2028. At his final press conference as Fed chief in April, Powell said he would not leave the central bank’s board “until this investigation is well and truly over, with transparency and finality.” A Fed spokesperson had no immediate comment on Blanche’s statements.

Warsh orders an independent audit

Powell’s successor as Fed chair is Kevin Warsh, who took over the role in May. Warsh said on Thursday he would hire an independent auditor to verify accuracy and compliance for all of the project’s costs, and would strengthen oversight of the renovation going forward.