Karoline Leavitt Clarifies DOJ Did Not Fully Drop Criminal Probe of Fed Chair Jerome Powell

WASHINGTON — White House Press Secretary Karoline Leavitt clarified on April 24, 2026, that the Justice Department’s announcement ending its criminal investigation into Federal Reserve Chair Jerome Powell does not mean the matter is closed — the case has simply been transferred to the Federal Reserve’s Inspector General.

Hours after U.S. Attorney for the District of Columbia Jeanine Pirro announced the DOJ was dropping the criminal probe, Leavitt told reporters: “The case is not necessarily dropped. It’s just being moved over to the inspector general who has critical tools at their disposal to continue to look into the financial mismanagement at the Fed. The investigation still continues, it’s just under a different authority.”

The investigation, opened in late 2025, examined whether Powell made false or misleading statements to Congress in June 2025 about the $2.5 billion renovation of the Federal Reserve’s Washington, D.C., headquarters. Critics, including Rep. Anna Paulina Luna, alleged Powell downplayed luxury features and cost overruns in his sworn testimony.

The DOJ issued grand jury subpoenas, but U.S. District Judge James Boasberg blocked them in March 2026, ruling there was no evidence of a crime. The probe had delayed Senate confirmation of President Trump’s nominee Kevin Warsh to succeed Powell, whose term ends in May 2026.

Leavitt’s comments came after Sen. Thom Tillis (R-N.C.) had threatened to block Warsh’s confirmation unless the investigation was resolved. The transfer to the Fed’s independent Inspector General keeps scrutiny on the renovation project while removing the criminal threat that was stalling the nomination.

For markets and lawmakers, the clarification maintains pressure on the Federal Reserve while allowing the leadership transition to move forward. No further DOJ action is expected.