Justice department drops Powell probe, clears path for Warsh to lead Fed

The US justice department is ending a controversial probe into building-renovation cost overruns by the Federal Reserve (Fed), potentially clearing a path to confirmation for Kevin Warsh, President Trump’s pick to be the next Fed chair replacing Jerome Powell.US attorney Jeanine Pirro said in a social media post on Friday that the Fed inspector general had been asked to scrutinise the cost overruns. She said she expects a report soon on the findings. “I have directed my office to close our investigation as the inspector general undertakes this inquiry,” Pirro said in the post. “Note well, however, that I will not hesitate to restart a criminal investigation should the facts warrant doing so.”Pirro initiated a legal battle to serve subpoenas to the central bank as part of a criminal investigation into the cost overruns and congressional testimony Powell provided.The White House said in a statement that “American taxpayers deserve answers about the Federal Reserve’s fiscal mismanagement, and the office of the inspector general’s more powerful authorities best position it to get to the bottom of the matter.”Warsh, who appeared before the Senate Banking Committee this week, enjoys broad support among GOP lawmakers, but a key Republican senator, Thom Tillis of North Carolina, vowed to block his confirmation unless the justice department investigation was dropped.The reversal was abrupt because Pirro said earlier this week she was committed to continuing the investigation. Pirro’s office didn’t reply to questions about what changed. Justice department leaders also had given their support to Pirro as a matter of principle to challenge a ruling that undercuts the ability of prosecutors to use grand juries during the early stages of an investigation.US district chief judge James Boasberg in March quashed two grand jury subpoenas that Pirro’s office served in Jan. Pirro had said she would appeal the ruling. The investigation threw the Federal Reserve’s leadership transition into chaos, as Powell’s term is scheduled to end on May 15.