DOJ closes Powell probe after Fed watchdog finds no crimes, but leaves door open for future action

Key points

• Attorney General Todd Blanche stated the DOJ will not reopen the criminal probe into Jerome Powell, citing the inspector general’s finding of no criminal violations.
• The Fed’s inspector general report identified 'deficiencies in management' and cost overruns but stopped short of finding administrative misconduct or criminal intent.
• Blanche acknowledged the renovation project ran over budget by several hundred million dollars but argued that lack of oversight is not necessarily a crime.
• The DOJ had previously dropped the probe earlier this year after Republican lawmakers blocked the nomination of Fed Chair Kevin Warsh until the investigation was resolved.
• President Trump continued to attack Powell, suggesting he should resign immediately, despite the legal clearance.
• Powell remains on the Federal Reserve Board of Governors until early 2028, a move he said was necessary to defend the central bank’s independence.

Background

The DOJ had initially opened a criminal probe into Powell’s handling of the $2.5 billion renovation project but dropped it earlier in 2026 after Republican lawmakers refused to support the nomination of current Fed Chair Kevin Warsh until the matter was resolved. The probe was a key point of contention between the administration and the Federal Reserve. Powell stepped down as chair in May when his term expired but remained on the board to protect the Fed’s independence, a stance that drew criticism from President Trump, who had previously criticized Powell for refusing to lower interest rates.

How outlets are covering it

All three sources agree that the DOJ will not reopen the criminal probe. However, they differ in emphasis. POLITICO and the Financial Times highlight Attorney General Blanche’s statement that while the probe is closed, future action is possible if an independent auditor uncovers evidence of wrongdoing. The Financial Times specifically notes that Blanche was satisfied with the inspector general’s report but did not believe Powell had appropriately overseen the project. POLITICO emphasizes the inspector general’s finding of no criminal violations. The Financial Times also notes that Trump revived his attacks on Powell after the report, demanding his resignation, while POLITICO focuses on the legal and procedural aspects of the decision. The Axios source, which was largely a cookie consent page, did not provide substantive content for comparison.

Why it matters

The decision to close the probe without reopening it signals a de-escalation in the legal conflict between the DOJ and the Federal Reserve, but it does not fully resolve the political tensions. The potential for future action based on an independent audit keeps the issue alive. Trump’s continued attacks on Powell, despite the legal clearance, suggest that the political fight over the Fed’s independence and monetary policy may continue. The outcome could have implications for the Fed’s ability to operate independently and for future appointments to the board.

What to watch

The Fed has said it will engage an independent auditor to scrutinize the renovation project’s costs. If the auditor uncovers evidence of criminal wrongdoing, the DOJ could potentially reopen the investigation. Powell will remain on the Fed board until early 2028. Trump may continue to press for Powell’s resignation, though the legal basis for such a demand is now weaker. The independent audit will be a key next step in determining whether any further action is warranted.