The US Justice Department said Friday it is dropping a criminal probe on Federal Reserve Chair Jerome Powell, paving the way for his replacementโs Senate confirmation, amid concerns over President Donald Trumpโs attacks on the independent central bank.
โI have directed my office to close our investigation,โ US Attorney Jeanine Pirro announced on X.
Pirro said the inspector general for the Fed would instead look into renovation cost overruns at its headquarters, which the Justice Department had been probing โ under heavy pressure from Trump.
However, she added that she would โnot hesitate to restart a criminal investigation should the facts warrant doing soโ.
Trump has upended Washington norms by routinely criticising the Fed for not following his calls to cut interest rates more rapidly, while making personal attacks on Powell in particular.
The probe into Powell, whose term helming the Fed expires May 15, looked likely to hold up the Senateโs confirmation of Trumpโs pick for a new chairman, Kevin Warsh.
Now, Pirroโs announcement is set to ease that path. The investigation had been criticised by former Fed chiefs and lawmakers as an attempt to undermine the central bankโs independence from politics.
At Warshโs confirmation hearing this week before the Senate Banking Committee, Republican senator Thom Tillis reiterated that he would continue blocking new appointments to the Fed if the Powell investigation were not resolved.
Tillisโs vote against the appointment would have been enough to set up an impasse on the panel, which Warsh needs to clear to become the next Fed chief.
โSenator Tillis should do the right thing and move to confirm Kevin Warsh as speedily as possible,โ White House Press Secretary Karoline Leavitt urged Friday.
โHe is a phenomenal candidate to lead the Fed, and we shouldnโt be holding our nationโs economy hostage because of a disagreement with the Department of Justice,โ Leavitt told reporters.
โBogusโ Investigation
But the top Democrat on the Banking Committee, Senator Elizabeth Warren, warned that the closure of the investigation does not end political pressure on the Fed.
โLetโs be clear about what the Justice Department announced today: they threatened to restart the bogus criminal investigation into Fed Chair Powell at any time while failing to drop their ridiculous criminal probe against Governor Lisa Cook,โ she said.
Warren was referring to a separate attempt by Trump to fire Cook over allegations of mortgage fraud. The case is currently before the Supreme Court, which is expected to rule on whether he can oust her.
Powell first took the helm of the Fed during Trumpโs first presidency in 2018 and was subsequently reappointed to the position under Democratic president Joe Biden.
Apart from Tillisโs objections on the Senate panel, Powell himself said last month that he would not leave his post on the Fedโs board of governors until the Justice Department probe involving him was โwell and truly over, with transparency and finalityโ.
It is rare for a former Fed chair to remain on its board after stepping down as chief, and Powellโs Fed governor term ends in 2028.
It remains to be seen if Powell plans to stay on with the probe now being dropped.
All eyes will be on his remarks at a press conference next week after a two-day policy meeting among Fed officials.
AFP