Justice Department Won’t Reopen Criminal Probe of Ex-Fed Chair Powell Over Nearly $2.4 Billion Renovation
The Justice Department will not reopen its criminal investigation into former Federal Reserve Chair Jerome Powell over the Fed's headquarters renovation, a department spokesperson told CNBC on Friday.
Attorney General Todd Blanche said in an interview the same day that the department is not reopening the case. He did not rule out separate action tied to the renovation.
Blanche Leaves Room for Other Action
Blanche said an independent audit of the project could prompt a new investigation if it uncovers evidence of criminal wrongdoing, CNBC reported. The Fed has said it will bring in that auditor.
In the interview, Blanche separated criminal conduct from accountability. Powell, he said, should be held accountable for mismanagement. The inspector general's report speaks for itself on what the board did and did not do, he said.
Accountability is what President Donald Trump expects of him.
What the Inspector General Found
The comments came two days after the Fed's inspector general found no reasonable grounds to believe a federal crime occurred that would require a referral to the attorney general. The watchdog still faulted the central bank for management and oversight failures.
Politico reported that the budget grew from about $1.3 billion in 2020 to nearly $2.4 billion. According to that report, the Fed did not follow cost-control practices such as setting a guaranteed maximum price.
The inspector general also found no misconduct by the Fed board. Construction inflation during the Covid era and asbestos discovered on site added to the overrun.
The review began in July 2025 at Powell's request. It found that the Fed board departed from key cost-management terms in its construction manager at risk contract. That delivery method was adopted after overruns on an earlier renovation of another Fed building.
Fed Chair Kevin Warsh said the General Services Administration will take over management of the project, Politico reported.
How the Criminal Probe Ended
The Justice Department opened its investigation in January and issued grand jury subpoenas for related records. A federal judge quashed them in March.
The judge found they were issued for an improper purpose and that the government had produced essentially no evidence of a crime by Powell.
The department disputed the ruling. It closed the investigation instead of appealing, CNBC reported. U.S. Attorney for the District of Columbia Jeanine Pirro dropped the matter in April, saying she would defer to the inspector general's inquiries, according to Politico.
Trump Presses for Powell's Exit
Trump said in a Truth Social post on Wednesday that Powell should be forced to resign from the Fed's Board of Governors. He added that Powell should be sued by the federal government for corruption or incompetence if he stays.
He also said he had asked Blanche to decide what to do about the project.
Powell left the chair's post in May. His four-year term expired, and Warsh took over. Powell remains a Fed governor through January 2028. He told Politico's readers through earlier statements that he stayed to help defend the central bank's independence.
Trump's post also criticized Powell's approach to interest rates. For readers following borrowing costs, networth.com has tracked rate-hike odds as the Fed's leadership changes.