In an interview with Bloomberg's Myles Miller on Friday, Attorney General Todd Blanche said, "We're not reopening a criminal investigation into him," referring to former Fed Chair Jerome Powell and the central bank's costly headquarters renovation. Blanche said he was pleased with the internal watchdog's review but argued Powell did not adequately manage the project. He also signaled the door is open if new facts emerge, adding, "If they learn anything that rises to any kind of criminal misconduct, you better believe we're going to investigate that."
The Federal Reserve's Office of Inspector General reviewed the renovation, now pegged at $2.4 billion after a series of errors pushed costs higher from a 2020 estimate of $1.3 billion. The review found no indication that Powell committed any crimes in relation to the project. The Fed says it will hire an independent auditor to dig into the bill. Blanche said he expects that audit to move forward and made clear the Justice Department could act if it uncovers potential crimes.
US Attorney for the District of Columbia Jeanine Pirro said in April she directed her office to close its inquiry after objections from lawmakers in both parties. Her office said she is reviewing the 121-page watchdog report.
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President Donald Trump and Republican lawmakers have repeatedly seized on the escalating renovation costs, arguing the Fed overreached on spending and design under Powell's leadership. Those criticisms preceded a criminal probe into Powell's handling of the project. This week, Trump said Powell should step down from the Fed board in light of the watchdog's findings, posting, "If he doesn't resign, he should be sued, at the highest level, by the United States Government, for either corruption or incompetence, both of which are completely unacceptable." Powell left the chair position in May and remains on the board. After Trump returned to the White House last year, he and Powell have been at odds; before that, he had urged steeper rate cuts to aid housing and reduce the government's borrowing costs.
With November's midterms approaching, Blanche rejected suggestions that the administration might use the Insurrection Act to deploy federal officers to polling sites, saying, "No. We're not looking at that," and labeling it "fearmongering from Democrats." He said it was "hard to imagine" circumstances where that would apply and called the scenario hypothetical, adding, "The American people showed two years ago that their voice can be heard and heard loudly."
For everyday investors, the signal to track is the independent audit the Fed plans to commission and whether it turns up anything that prompts a fresh DOJ look. Right now, the internal review says no crimes tied to Powell, and DOJ isn't reopening the case. If the outside audit surfaces new evidence, the tone could shift. Until then, this saga is more about governance and credibility than immediate market moves.
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