DOJ Drops Powell Investigation, Clearing Path for Warsh Nomination
By Tom LoBianco | Quincy News Correspondent
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Washington (Quincy News) — The Justice Department announced Friday it was ending its investigation of Federal Reserve Chairman Jerome Powell, clearing a path for successor Kevin Warsh to win Senate confirmation.
Jeanine Pirro, the U.S. attorney for the District of Columbia, had been leading the investigation into whether Powell misled Congress about the cost of Federal Reserve office renovations, a case that became a flashpoint in the ongoing dispute between Powell and President Donald Trump. The effort stalled in court after a federal judge blocked their subpoenas last month.
Meanwhile, Trump’s nominee to replace Powell as Fed chair had been held up in Senate confirmation, as Sen. Thom Tillis (R-N.C.) refused to support Warsh until the Justice Department dropped the criminal probe.
The Fed has maintained a target inflation rate of 2% in order to justify another interest rate cut since December’s quarter-point reduction to a range of 3.5% to 3.75%. But key inflation markers have been trending up, even before the price hikes spurred by the closure of the Strait of Hormuz, and Powell maintained his position on rates throughout.
Friday’s announcement comes just weeks before Powell’s term as chair is set to expire, but Trump and other Republicans have signaled the possibility of additional investigations into Powell and the Fed.
Senate Banking Chairman Tim Scott (R-S.C.) promised he would continue investigating the cost of the new Federal Reserve offices and would invite the Fed’s inspector general to brief the committee within 90 days.
“As I’ve said from the beginning, the American people deserve answers about the unacceptable cost overruns at the Federal Reserve. These serious concerns warrant scrutiny, and I’m pleased this matter is continuing to receive it,” Scott said in a statement.
Trump and Powell have been at odds over interest rates since the beginning of Trump’s second term, steadily escalating from a tense photo op last July in which Trump accused Powell of inflating the cost of the Fed’s multi-billion dollar renovation.
Pirro led the probe, but U.S. District Judge James Boasberg blocked the subpoenas regarding the renovation, finding insufficient evidence of a crime and raising concerns that the investigation lacked a proper legal basis.
Responding to the judge’s decision, Pirro said: “As a result, Jerome Powell today is now bathed in immunity, preventing my office from investigating the Federal Reserve. This is wrong, and it is without legal authority.”
Sen. Elizabeth Warren (D-Mass.), the top Democrat on the Banking Committee, referenced separate efforts by the administration to remove Federal Reserve Governor Lisa Cook before her term expires in 2038.
“Anyone who believes Donald Trump’s corrupt scheme to take over the Fed is over is fooling themselves. The Senate should not proceed with the nomination of Kevin Warsh,” Warren said in her statement.
The announcement marks a victory for Tillis, the senior Senate Republican, who has increasingly broken with the White House since announcing he would not seek re-election in November.
Tillis did not respond to Friday’s announcement, according to Punchbowl News.
Earlier in the week during Warsh’s confirmation hearing, Tillis reaffirmed his opposition to any nominee until the investigation was dropped.
“Kevin Warsh is a great nominee to be Chairman of the Federal Reserve, and I look forward to supporting him out of committee once the DOJ drops their bogus investigation into Chairman Powell that threatens the independence of the Fed,” Tillis wrote on X after the hearing.
During his comments, staff held a sign behind Tillis quoting Warsh himself saying, “Independence in the conduct of monetary policy is at the core of advanced modern economies.”
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