Commercial
DOJ closes Powell criminal probe, Fed renovation fight winds down
By Real Estate Wire Staff, . Real Estate Wire.
The Justice Department will not pursue criminal charges against former Federal Reserve Chairman Jerome Powell over his handling of the central bank's headquarters renovation project, Attorney General Todd Blanche told Bloomberg on Friday, according to Scotsman Guide's reporting on the exchange.
Blanche was direct about the reasoning. "Making mistakes and not having any sort of oversight over the folks doing billion-dollar projects isn't necessarily a crime," he said, as quoted by Scotsman Guide. "We closed that criminal investigation, as you know, and we're not reopening a criminal investigation into him."
The decision follows a report from the Fed's Office of Inspector General, the central bank's internal watchdog, which examined Powell's management of the renovation. The inspector general found significant oversight failures and project management deficiencies but concluded they did not constitute criminal conduct. Scotsman Guide quoted the report directly: "At no point during our evaluation did we find reasonable grounds to believe that a violation of federal criminal law had occurred requiring a referral to the U.S. Attorney General in accordance with the Inspector General Act."
The episode had been running for months. In January, Powell disclosed that he and the Fed had been subpoenaed by the Justice Department in connection with Senate testimony he gave in June 2025 about the project's rising costs. A federal judge subsequently quashed those subpoenas, finding, as Scotsman Guide reported, "abundant evidence that the subpoenas' dominant (if not sole) purpose is to harass and pressure Powell either to yield to the President or to resign and make way for a Fed Chair who will."
Powell's term as Fed chair ended in May. He has remained on the Fed's board, with Scotsman Guide noting that uncertainty over the probe's status was a factor in that decision.
President Donald Trump, responding to the inspector general report's release Wednesday, posted on social media calling for Powell to be sued by the federal government for "either corruption or incompetence," and said he had asked Blanche to review the report and determine next steps. The White House had not responded to a request for comment by the time Scotsman Guide published.
The door is not entirely closed. Blanche told Bloomberg that if a forthcoming independent audit uncovers potential wrongdoing, the Justice Department would act. "If they learn anything that rises to any kind of criminal misconduct, you better believe we're going to investigate that," he said, as quoted by Scotsman Guide.
That audit was set in motion by current Fed Chair Kevin Warsh, who in a letter to the inspector general dated Tuesday said he has engaged the U.S. General Services Administration to oversee completion of the renovation and will bring in an independent auditor to verify the accuracy and compliance of all costs awarded to date, according to Scotsman Guide.
For the commercial real estate and construction finance community, the practical significance of Blanche's statement is that the immediate legal cloud over Powell has lifted. The harder question, which the reporting does not yet answer, is what the independent audit will find and whether any cost irregularities in a project of this scale implicate contractors, subcontractors or procurement processes beyond Powell's personal conduct. That is the thread worth watching as Warsh's audit gets underway.