The U.S. Department of Justice has abruptly ended its criminal investigation into the Federal Reserve and its chairman, Jerome Powell, signaling a temporary de-escalation in a high-stakes standoff over the central bank’s internal management. The probe centered on a massive renovation project at the Fed’s Washington D.C. headquarters, which has become a flashpoint for critics of the institution’s fiscal transparency.
Federal Prosecutor Piro confirmed the shift, stating that the matter will now be handled by the Federal Reserve’s Office of Inspector General. While the criminal case is closed for now, the Inspector General has been tasked with conducting a thorough investigation into cost overruns that reportedly reach into the billions of dollars. This internal watchdog is expected to ensure the Fed remains accountable to American taxpayers.
The move represents a tactical retreat by the DOJ, which appears to be favoring administrative accountability over the immediate threat of criminal prosecution. By shifting the burden to the Inspector General, the government maintains pressure on the Fed to account for taxpayer funds while avoiding the unprecedented spectacle of a sitting central bank chair in the crosshairs of a criminal trial.
However, the reprieve may be fragile. Prosecutor Piro emphasized that the DOJ has not permanently shut the door, noting that his office remains ready to reopen the criminal investigation should the Inspector General’s findings reveal more systemic malfeasance. The transition of the probe occurs against a backdrop of shifting political winds, with some observers suggesting that the removal of legal clouds may facilitate a smoother transition for future leadership at the bank.