The Justice Department announced on Friday that it was dropping its criminal investigation into the Federal Reserve and its chair, Jerome H. Powell, clearing the path for President Trump’s pick, Kevin M. Warsh, to become the next chair of the central bank.
The investigation by Jeannine Pirro, the U.S. attorney for the District of Columbia, had been a roadblock to Mr. Warsh’s confirmation. A top Republican on the Senate Banking Committee, which oversees the Fed, vowed to block any of Mr. Trump’s nominees until the legal threats against Mr. Powell, the chair, and the institution more broadly were dropped.
The inquiry focused on whether Mr. Powell lied to Congress about the Fed’s costly renovations at its headquarters in Washington.
Since last year, federal prosecutors have probed Mr. Powell over concerns that he may have misrepresented the total cost of an ongoing renovation of the central bank’s Washington headquarters. The inquiry has drawn a rare, public rebuke from Mr. Powell, who has framed the probe as part of an effort by Mr. Trump to put pressure on policymakers to lower interest rates and encroach on the Fed’s longstanding independence.
As part of that investigation, prosecutors recently issued grand jury subpoenas seeking information about the renovations at the Fed’s and Mr. Powell’s testimony to Congress about them. But the move was blocked in March by James E. Boasberg, the chief judge in Federal District Court in Washington, who handles all matter in front of grand juries. In a blistering opinion, Judge Boasberg described the subpoenas as an attempt “to harass and pressure Powell either to yield to the president or to resign and make way for a Fed chair who will.”
During a closed-door hearing, prosecutors under Ms. Pirro effectively acknowledged that they had no evidence that Mr. Powell had committed any crimes but wanted to press forward with their inquiry anyhow. After the judge shot down their request for the subpoenas, dealing the investigation a crippling blow, Ms. Pirro’s office asked him to reconsider his decision and he denied it for a second time.
Mr. Powell’s term is set to end May 15, leaving Senate Republicans just weeks to confirm Mr. Warsh, who testified in front of lawmakers on Tuesday as part of his nomination process.
This is a developing story. Please check back for updates.
