WASHINGTON — U.S. Attorney Jeanine Pirro said the future of her office’s investigation into Federal Reserve Chair Jerome Powell now depends on the Fed’s inspector general, shifting the next test in the politically charged case to the central bank’s internal watchdog, May 3, 2026. The move comes after the Justice Department dropped its criminal probe into Powell while leaving open the possibility that prosecutors could revisit the matter if the watchdog finds evidence of wrongdoing.
Pirro, the U.S. attorney for the District of Columbia, said on CNN’s “State of the Union” that the Fed Office of Inspector General’s review of the central bank’s headquarters renovation will dictate whether there is anything left for prosecutors to pursue. According to Reuters’ latest report on Pirro’s comments, she said: “If there’s something there, great — and if there isn’t, I’ll go home.”
Powell probe shifts from prosecutors to the Fed watchdog
The case centers on the Federal Reserve’s renovation of the Marriner S. Eccles Building and the 1951 Constitution Avenue building in Washington. The Fed says the board-approved budget for the project is $2.46 billion, and that the buildings require extensive modernization after decades without a comprehensive overhaul. The Fed has also said its independent watchdog has had access to project costs, contracts, schedules and expenditures, according to the central bank’s renovation project FAQ.
The Fed Office of Inspector General is already examining the project. Its public list of ongoing work says the office is assessing the board’s oversight of the Eccles and 1951 Constitution Avenue renovation, including the causes of cost estimate increases and whether discretionary design features materially contributed to them. That ongoing review is listed on the watchdog’s current work page.
Pirro’s comments mark a tactical retreat from the most aggressive phase of the case, but not a clean political or legal ending. Her office closed the criminal investigation in April after a federal judge blocked subpoenas issued to the Fed, ruling prosecutors had not shown a proper basis for the demands. In its report on the Justice Department’s decision to close the case, Reuters reported that Pirro asked the Fed watchdog to take over the inquiry and said the matter could be revived if facts warranted it.
How the renovation fight became a legal and political flashpoint
The dispute did not begin with subpoenas. In July 2025, Trump administration officials publicly criticized Powell and the Fed over the renovation’s cost increases and design questions. Powell responded by asking Inspector General Michael Horowitz to review the project, a step that turned an intensifying political fight into a formal watchdog matter. Reuters reported at the time that Powell made the request after the project became a focus of White House criticism.
The matter escalated again in January, when reports said federal prosecutors were examining whether Powell had misled Congress about the renovation during testimony. The controversy quickly became entangled with President Donald Trump’s long-running criticism of Powell over interest rates and the Fed’s independence. In a January overview, Axios described the investigation as an unprecedented escalation in Trump’s effort to pressure the central bank.
By March, the legal momentum had turned against prosecutors. Chief U.S. District Judge James Boasberg blocked subpoenas tied to the case, finding the government had not produced evidence sufficient to justify them. That ruling undercut the criminal probe and intensified criticism from lawmakers who saw the investigation as an attempt to pressure Powell to resign or change monetary policy.
Powell probe keeps Fed independence in the spotlight
The stakes extend beyond one building project. Powell’s term as Fed chair ends May 15, but he has said he will remain on the Federal Reserve Board as a governor, a decision widely viewed as a signal that he wants the legal and institutional dispute fully resolved before leaving the central bank. His continued presence could complicate the administration’s effort to reshape the Fed’s leadership and policy direction.
The case also intersects with Kevin Warsh’s expected path to succeed Powell as chair. The investigation had become a stumbling block for Warsh’s confirmation, in part because some Republicans were uncomfortable advancing a nominee while Powell remained under criminal scrutiny. Pirro’s decision to close the criminal case removed one obstacle, but her insistence that the watchdog’s findings could determine what happens next keeps uncertainty alive.
For the Fed, the immediate question is narrow: whether the inspector general finds evidence that renovation costs, contracts or representations to Congress were mishandled. For Washington, the broader question is whether a criminal inquiry into a sitting Fed chair was a legitimate response to a costly government-adjacent building project or a political weapon aimed at the central bank’s independence.
Pirro’s latest comments place the next move with Horowitz’s office. Unless the watchdog identifies facts that support a renewed prosecutorial review, the Powell probe may end where Powell and his defenders argued it belonged from the beginning: inside an independent audit process, not a criminal courtroom.
