U.S. Attorney Jeanine Pirro announced Friday that federal prosecutors are closing their criminal investigation into Federal Reserve Chairman Jerome Powell, shifting the inquiry over potential cost overruns at the Fed's Washington, D.C., headquarters renovation to the central bank's own inspector general. The move clears a major obstacle to Kevin Warsh's confirmation as Powell's successor, and raises fresh questions about whether anyone will be held accountable for a project whose price tag ballooned by hundreds of millions of dollars.

Pirro wrote on X that she had directed her office to close the investigation, expressing confidence that the inspector general's review would resolve the questions that prompted prosecutors to issue grand-jury subpoenas in the first place.

"Accordingly, I have directed my office to close our investigation as the IG undertakes this inquiry."

She added a pointed warning: "Note well, however, that I will not hesitate to restart a criminal investigation should the facts warrant doing so."

A probe that started with a bang

The investigation burst into public view in January, when Powell revealed in a video that the Fed had received grand-jury subpoenas as part of an ongoing criminal investigation. The subpoenas threatened an indictment related to Powell's testimony before the Senate Banking Committee in June 2025 about the renovation project, a massive undertaking first approved in 2017, encompassing two buildings, and now set for completion next year.

The estimated cost of the project rose from $1.9 billion to nearly $2.5 billion. The Fed attributed the increase to design changes after consultations with review agencies, rising costs for materials, equipment, and labor, and unforeseen conditions including soil contamination and more asbestos than initially expected.

Those explanations did not satisfy prosecutors. Days after Pirro told reporters at a Wednesday press conference that "this investigation continues," two prosecutors and an investigator from her office made an unannounced visit to the Fed's headquarters and attempted to gain access to the building's ongoing renovations. They were denied entry.

Pirro told reporters she drew a clear line between her work and the political pressures surrounding the case. "I am in the legal lane, there are others that are in the political lane. I don't intersect those two lanes," she said.

A judge's roadblock

The criminal probe hit a wall in March when Chief Judge James Boasberg of the U.S. District Court for the District of Columbia quashed the pair of subpoenas. Boasberg described the investigation as "a pretext to pressure Powell into voting to lower interest rates or resigning." The Justice Department asked Boasberg to reconsider. He denied that request earlier this month.

Pirro said her office planned to appeal Boasberg's ruling. But the Justice Department ultimately did not ask the federal appeals court in Washington to review the district judge's decision, a move that, in practical terms, left prosecutors without the tools to compel cooperation from the Fed. The broader climate of tension between the judiciary and the political branches made the legal path even more uncertain.

With the subpoenas dead and the appeals path abandoned, handing the matter to the inspector general was the remaining option for anyone who still wanted answers about how a $1.9 billion renovation became a $2.5 billion one.

The inspector general steps in

The Fed's Office of the Inspector General said it has been evaluating the renovation project since last July, including an independent analysis of what it called "substantial cost increases and overruns." The office said it is "actively working to complete our review, and look forward to making the results available to the public and Congress upon completion."

The inspector general at the central bank has twice conducted audits regarding renovation projects. The current IG, Michael Horowitz, previously served in the same role at the Justice Department, where he reviewed the origins of the FBI's investigation into the 2016 election and alleged ties between the Trump campaign and Russia.

Powell himself told the Senate last year that he had asked the internal watchdog to "take a fresh look at the project." Whether that self-referral was a genuine effort at transparency or a preemptive shield against outside scrutiny depends on your view of the Fed chairman, and whether you trust an institution to investigate itself.

White House spokesman Kush Desai framed the handoff in practical terms:

"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 Fed, for its part, declined to comment. The central bank is self-funded and not reliant on taxpayer dollars, a fact it has long cited to insulate itself from congressional budget oversight. But "self-funded" does not mean "unaccountable," and a $600 million cost overrun on a headquarters renovation is the kind of figure that demands a clear explanation regardless of who writes the checks.

Warsh confirmation path clears

The timing of Pirro's announcement was no accident. Kevin Warsh, President Trump's nominee to succeed Powell as head of the Fed's Board of Governors, testified before the Senate Banking Committee on Tuesday. He pledged that the central bank would remain "strictly independent" in its monetary policy decisions, a line aimed squarely at senators worried about political interference with the Fed.

Republican Sen. Thom Tillis of North Carolina had said he would not vote to confirm any nominee until the Fed investigation was dropped. With the probe now closed, that obstacle disappears. The White House said it is confident the Senate will confirm Warsh. The earlier friction between the administration and Tillis over the nomination had threatened to delay the transition at a moment when markets crave certainty.

Powell's tenure as chairman is set to end in May, though he can remain a governor on the Fed's Board until early 2028. President Trump has often criticized Powell over interest rates, at one point calling him "a jerk" and saying his actions were "too late." Trump threatened to fire Powell earlier this month and last year suggested the renovation cost overruns could themselves be grounds for dismissal.

Last year, Trump and Powell donned hardhats and visited the Fed's headquarters together to survey the renovation project, a scene that, in hindsight, looks less like a friendly tour and more like a warning shot.

Accountability deferred, again

The question now is whether the inspector general's review will produce real accountability or a bureaucratic report that gathers dust. Inspector general investigations are thorough but slow. They lack the leverage of a grand jury. And they depend on the willingness of the institution under review to cooperate fully, a dynamic that has produced mixed results across the federal government.

The Fed's explanation for the cost increase, design changes, rising labor costs, unexpected asbestos, may be perfectly legitimate. Construction projects of this scale routinely exceed initial estimates. But a jump from $1.9 billion to nearly $2.5 billion is not a rounding error. It is a 30 percent overrun on a project overseen by the institution that lectures the rest of the country about fiscal discipline.

The pattern of federal judges blocking executive branch construction and renovation efforts has become a recurring theme in Washington. In this case, the judicial intervention quashed the subpoenas that might have forced a faster reckoning.

ABC News first reported Friday that the Justice Department was set to drop the probe. The announcement followed a week of rapid developments: Warsh's testimony on Tuesday, Pirro's press conference on Wednesday, the unannounced visit to the Fed shortly after, and then the formal closure.

Whether the inspector general delivers a report that names specific failures, or one that spreads blame so thin nobody is responsible, will determine whether this episode amounts to genuine oversight or a quiet burial. The recent pattern of high-profile departures and institutional reshuffling across the administration suggests the appetite for accountability is real, even when the mechanisms are imperfect.

Pirro's warning, that she will restart a criminal investigation if the facts warrant it, is either a meaningful reservation of authority or a face-saving line on the way out the door. The answer depends entirely on what the inspector general finds, and whether anyone in Washington still has the will to act on it.

A $600 million overrun deserves more than a fresh coat of paint on the explanation. Taxpayers, and the institution that prints their money, ought to agree on that much.