The US justice department is dropping its investigation into the Federal Reserve chairman, Jerome Powell, over alleged building cost overruns.
US Attorney Jeanine Pirro stated that an internal investigation led by the central bank's inspector general will be conducted instead.
President Donald Trump has expressed that the cost of the Fed's building renovations was excessively high, which is part of an ongoing feud with Powell.
Powell's term is nearing its end, with the US Senate evaluating Trump's nominee for his successor, Kevin Warsh. A notable Republican senator, Thom Tillis, is withholding his support for Warsh pending the cessation of the investigation into Powell.
American taxpayers deserve answers about the Federal Reserve's fiscal mismanagement, asserted White House spokesman Kush Desai. The Inspector General's more powerful authorities best position it to get to the bottom of the matter.
The White House remains confident that the Senate will promptly confirm Warsh, in hopes of restoring competence and confidence in Fed decision-making.
Trump called for the Fed to lower interest rates after returning to office last year, even suggesting that firing Powell could be a possibility, an action some believe could be illegal.
Once Trump criticized the Fed's escalating renovation costs, highlighting that it would amount to $3.1 billion, significantly above the Fed's projection of $2.5 billion, the Fed defended the renovations as necessary for long-term cost reduction.
Powell took an unusual step in January by releasing a video revealing that the justice department had issued subpoenas to the Fed and threatened criminal indictment over his Senate testimony regarding the renovations.
Describing the investigation as unprecedented, Powell believed it was a result of Trump's frustration with the Fed for not cutting interest rates under public pressure. Trump denied having knowledge of the investigation.
This situation marked a pivotal moment where Powell robustly defended the Fed's independence, stressing the importance of monetary policy being free from political coercion.
The renovations, taking place at the Eccles and 1951 Constitution Avenue buildings, are the first since these structures were built in the 1930s and include critical work to remove asbestos and lead contamination.
Powell, who's been Fed chair since Trump nominated him in 2017, intends to remain in the position until Warsh is confirmed by the Senate, which must occur before Powell's term officially ends on May 15.
Recent tensions escalated further when Trump threatened to fire Powell unless Powell departed at the conclusion of his term.
