The U.S. Justice Department has dropped its investigation into Federal Reserve Chairman Jerome Powell regarding alleged building cost overruns. Instead, an internal investigation will be led by the central bank's inspector general.
President Donald Trump had expressed concerns over the high costs of the Fed's building renovations, amid a public disagreement with Powell. The Federal Reserve is undertaking renovations on its Eccles and 1951 Constitution Avenue buildings, the first since their construction in the 1930s. These renovations include essential health and safety work such as asbestos and lead removal. The Fed asserts the project will reduce long-term costs, though Trump has criticized the estimated $3.1 billion cost, exceeding the Fed's $2.5 billion forecast.
White House spokesman Kush Desai stated that the Office of the Inspector General is best positioned to investigate the matter. The White House also reiterated its confidence in the swift confirmation of Kevin Warsh as the next Federal Reserve Chairman.
Powell previously disclosed that the Justice Department had issued subpoenas and threatened a criminal indictment related to his testimony on building renovations. He characterized the investigation as unprecedented and believed it stemmed from Trump's dissatisfaction with the Fed's refusal to lower interest rates, despite presidential pressure. Powell emphasized that the Fed's ability to set interest rates based on economic conditions, rather than political influence, was at stake.