Prosecutors’ visit to Fed renovation site underscores probe that has stalled leadership change

The investigation into the Federal Reserve’s $2.5 billion headquarters renovation has effectively frozen a change in leadership at the central bank, blocking President Trump’s nominee from taking over as chair. Federal prosecutors visited the construction site this week in an unannounced attempt to inspect progress, but were turned away by contractors and referred to Fed attorneys. The probe, led by U.S. Attorney Jeanine Pirro’s office, centers on cost overruns—now nearly 80% above the 2022 estimate of $1.9 billion—and brief testimony Powell gave last June. But a top deputy in Pirro’s office conceded in a closed-door hearing last month that no evidence of a crime has been found. U.S. District Judge James Boasberg has already ruled that prosecutors’ interest in the project is “pretextual.”

Despite that, the investigation has had real consequences. Senator Thom Tillis, a key Republican on the Senate Banking Committee, is withholding support for Kevin Warsh, Trump’s nominee to replace Powell. Tillis says the probe is “bogus, ill-timed, ill-informed” and that seven Republican committee members agree Powell did not commit a crime. But with the committee narrowly divided, Tillis’s opposition is enough to halt Warsh’s confirmation. That creates a stalemate: Powell’s term as chair ends May 15, but he has said he will remain until the investigation concludes. If he stays, Trump loses the chance to appoint a new member to the seven-member board. “That is what the law calls for,” Powell said in March, “and that’s what we’re going to do.”

Trump continues to back the investigation, framing it as necessary scrutiny of incompetence or corruption. “Whether it’s incompetence, corruption or both I think you have to find out,” he said. He has also threatened to fire Powell if he remains on the board after his term ends—though Senate Republicans like Josh Hawley note such a firing would require “cause,” a high legal bar. The Supreme Court is currently weighing that exact issue in the case of Fed Governor Lisa Cook, whose legal challenge to her removal could shape the precedent for Powell’s position. For now, the renovation project—over budget and under scrutiny—has become the fulcrum of a broader battle over the Fed’s independence and presidential power.