US Attorney Jeanine Pirro, the top federal prosecutor in Washington, announced on X that she was closing the investigation and referring oversight of the matter to the Federal Reserve’s inspector general, who has been examining cost overruns in the multibillion-dollar renovation of the Fed’s Washington headquarters since last summer. The announcement came three days after Warsh testified before the Senate Banking Committee — and three days after Pirro had publicly stated she was committed to continuing the probe.

The timing of the reversal was not coincidental. Republican Senator Thom Tillis of North Carolina, a Banking Committee member, had effectively placed a hold on a full Senate vote to confirm Warsh, refusing to allow the confirmation to proceed while the criminal investigation of the sitting Fed chair remained active. With the probe now closed, that obstacle is removed.

Pirro framed the handoff as a matter of appropriate jurisdiction rather than political capitulation. “The IG has the authority to hold the Federal Reserve accountable to American taxpayers,” she wrote, adding that she expected “a comprehensive report in short order” and warning that she would “not hesitate to restart a criminal investigation should the facts warrant doing so.” The preservation of that threat — the investigation is closed, but not foreclosed — drew immediate notice from critics who saw it as leverage retained rather than relinquished.

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Powell and his defenders had argued throughout that the stated rationale for the investigation — questions about renovation cost overruns and Powell’s testimony about the project before the Banking Committee — was pretextual, and that the real purpose was to pressure the Fed to cut interest rates in line with Trump’s public demands. Powell had himself asked the inspector general in July to review the renovation after Trump criticised its costs, and the IG had been conducting that evaluation for months before Pirro’s office issued subpoenas that a federal judge subsequently quashed.

The White House welcomed the development while maintaining the renovation inquiry framing. Spokesman Kush Desai said American taxpayers “deserve answers about the Federal Reserve’s fiscal mismanagement” and expressed confidence that the Senate would “swiftly confirm Kevin Warsh as the next Federal Reserve Chairman to finally restore competence and confidence in Fed decision-making.” The language of fiscal accountability and restored confidence was a clean restatement of the administration’s position — the investigation was always about the building, never about interest rates.

Senate Banking Committee Chairman Tim Scott of South Carolina echoed that framing, welcoming the inspector general’s review and inviting the IG to brief the committee within 90 days. “The Federal Reserve should be focused on price stability, not costly mismanagement,” he said.

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Senator Elizabeth Warren of Massachusetts, the committee’s ranking Democrat, offered a sharply different reading. “This is just an attempt to clear the path for Senate Republicans to install President Trump’s sock puppet Kevin Warsh as Fed Chair,” she said. She noted that while the Powell investigation was being closed, a separate probe targeting Fed Governor Lisa Cook — whom Trump sought to fire last summer after she resisted his interest rate demands — remained open. Cook denied allegations that she had made false statements on mortgage applications, filed suit to block her removal and has remained on the board while the Supreme Court considers her case.

“Anyone who believes Donald Trump’s corrupt scheme to take over the Fed is over is fooling themselves,” Warren said, urging the Senate not to proceed with Warsh’s confirmation.

Warsh, a former Fed governor who served during the 2008 financial crisis and has been publicly critical of the central bank’s post-pandemic inflation response, testified before the Banking Committee on Tuesday. His nomination represents Trump’s most direct attempt yet to reshape monetary policy, and the confirmation battle is expected to be contentious regardless of the cleared procedural path. The Fed declined to comment on Friday’s developments. Warsh, Pirro’s office and Tillis had not responded to media requests by the time of publication.