United States: Washington prosecutor drops charges against Fed chief

Jeanine Pirro announced the dropping of charges against Jerome Powell, the Fed chairman, for exceeding the renovation costs of his buildings.

The federal prosecutor in Washington, Jeanine Pirro, announced on Friday on her X account that she is dropping the charges against Federal Reserve (Fed) Chairman Jerome Powell regarding the exceeding renovation costs of the central bank’s buildings. This decision removes a major obstacle to the U.S. Senate confirming Donald Trump’s nominee to succeed Jerome Powell, Kevin Warsh, as a Republican senator had refused to vote as long as the Fed chairman was under investigation.

According to Jeanine Pirro, “The Inspector General for the Fed was mandated to investigate the issue of cost overruns related to renovation work. In these circumstances, I have instructed my office to end our investigation, since the Inspector General is taking over,” she added. The Office of the Inspector General (OIG), which reports to the Fed’s Board of Governors and the Consumer Financial Protection Bureau (CFPB), is specifically tasked with monitoring the daily activities of the U.S. central bank.

** Context note: Jerome Powell faced charges for exceeding renovation costs, but they were dropped by Jeanine Pirro. This development could impact the confirmation process for his successor in the Fed.

** Fact Check note: Kevin Warsh was nominated to replace Jerome Powell, and his confirmation process was hindered due to the investigation against Powell. Now, with the charges dropped, the confirmation process may proceed more smoothly.

Markets Do Not Expect a Fed Rate Cut

The dropping of charges against Jerome Powell should allow the Senate to quickly vote on the confirmation of his successor, as the current chairman’s term ends in mid-May. Republican Senator Thom Tillis had announced that he would not vote for Kevin Warsh as long as the current Fed chief remained under investigation. The presidential majority holds in the Senate, and just one Republican member of the banking committee can block the nomination of Kevin Warsh. During Tuesday’s hearing of Kevin Warsh by a Senate committee, Senator Tillis emphasized the candidate’s service record.

He served as one of the Fed governors from 2006 to 2011 and is considered a serious candidate by Republicans – his qualifications were never in question, only the legal process initiated with Donald Trump’s approval. As long as Kevin Warsh is not confirmed, Jerome Powell can remain at the helm of the Fed. Powell is set to preside over what could be his last meeting of the Federal Open Market Committee (FOMC) on Tuesday and Wednesday amid rising oil prices in the U.S. due to tensions in the Middle East. The markets do not expect a Fed rate cut, currently ranging between 3.50% and 3.75%. The next cut could come no earlier than the end of the year, according to CME’s FedWatch tool.