DOJ drops investigation into Fed Chair Powell ahead of transition

LEXINGTON, Ky. — The Justice Department has dropped its criminal investigation into Federal Reserve Chair Jerome Powell, according to LEX 18 News, ending a probe that had drawn criticism from Republican senators concerned about the Fed's independence.

U.S. Attorney Jeanine Pirro announced the decision to end the investigation in favor of an inspector general review, citing the IG's authority to hold the Federal Reserve accountable. The investigation had centered on Powell's June testimony to Congress regarding the cost of a major renovation of Federal Reserve buildings, which the Trump administration had criticized.

"The IG has the authority to hold the Federal Reserve accountable to American taxpayers. I expect a comprehensive report in short order and am confident the outcome will assist in resolving, once and for all, the questions that led this office to issue subpoenas," Pirro said in a statement. She noted she would "not hesitate to restart a criminal investigation should the facts warrant doing so."

The timing of the decision comes as the Trump administration seeks to confirm Kevin Warsh as the next Federal Reserve chair, with Powell's term expiring next month. Powell is expected to remain on the Federal Reserve Board as a governor.

The investigation had drawn sharp rebukes from Republicans who warned it could undermine the Federal Reserve's independence. Sen. Thom Tillis, R-N.C., previously accused Trump of threatening the institution's autonomy, while Sen. Lisa Murkowski, R-Alaska, said she would not support any Federal Reserve nominations until the investigation was resolved.

"The stakes are too high to look the other way: if the Federal Reserve loses its independence, the stability of our markets and the broader economy will suffer," Murkowski said.

The Federal Reserve's primary function involves setting the federal funds rate, which influences the interest rates banks charge each other for overnight loans and indirectly affects consumer lending rates for mortgages, auto loans and credit cards. Trump has previously expressed frustration with Powell over interest rate decisions, seeking lower rates from the central bank.