Federal Prosecutors Make Surprise Visit to Federal Reserve Construction Site Amid $2.5 Billion Probe

Federal prosecutors from the U.S. Attorney’s office made an unannounced visit this week to a construction site at Federal Reserve headquarters, escalating tensions in an ongoing investigation into a $2.5 billion renovation project. According to sources familiar with the matter, two prosecutors and an investigator from U.S. Attorney Jeanine Pirro’s office were turned away by building contractors on Tuesday and referred to Federal Reserve attorneys.

The unexpected visit signals the Trump administration’s determination to continue its probe of the Federal Reserve and its Chair, Jerome Powell, despite recent setbacks. Last month, during a closed-door hearing before a federal judge, a top deputy from Pirro’s office admitted they had not found evidence of any crime in their investigation of the headquarters project.

Following the visit, Robert Hur, an attorney for the Federal Reserve Board of Governors, sent an email to Pirro’s prosecutors addressing their request for a “tour” to “check on progress” at the construction site. In the email, Hur referenced U.S. District Judge James Boasberg’s previous conclusion that their interest in the renovation project was “pretextual,” suggesting the investigation may have ulterior motives.

“Should you wish to challenge that finding, the courts provide an avenue for you; it is not appropriate for you to try to circumvent it,” Hur wrote in the email, which The Associated Press has reviewed.

The investigation has created significant political complications, delaying the confirmation of Kevin Warsh, President Trump’s nominee to replace Powell as Fed Chair. Senator Thom Tillis, a North Carolina Republican and key member of the Senate Banking Committee, has vowed to vote against Warsh until the investigation is dropped. With the committee closely divided along partisan lines, Tillis’ opposition effectively blocks Warsh’s confirmation.

The Senate Banking Committee has scheduled a hearing on Warsh’s nomination for April 21. Powell’s term as Fed Chair ends May 15, though Powell stated last month he would remain as chair until a replacement is confirmed. Additionally, Powell is serving a separate term as a member of the Fed’s governing board that extends until January 2028.

“I have no intention of leaving the Board until the investigation is well and truly over, with transparency and finality,” Powell declared last month. If he remains in his seat even after Warsh’s confirmation, it would prevent Trump from filling a position on the seven-member board.

The investigation focuses on Powell’s testimony before the Senate Banking Committee last June regarding cost overruns on the Fed’s extensive building renovations. Current estimates place the project at $2.5 billion, approximately $600 million higher than the 2022 estimate of $1.9 billion.

“It is probably corrupt, but what it really is, is incompetent,” Trump said during a Fox Business interview that aired Wednesday. “Don’t you think we have to find out what happened there?”

The president’s continued support for the investigation threatens a timeline set by Senator Tim Scott, the South Carolina Republican who chairs the Banking Committee. Scott stated on Tuesday that he believed the investigation would be “wrapped up in the next few weeks,” potentially allowing Warsh’s confirmation to proceed shortly thereafter.

In the same Fox Business interview, Trump escalated tensions by threatening to fire Powell if he decides to stay on the central bank’s governing board after his term as chair expires next month.

“Well then I’ll have to fire him, OK?” Trump said when reminded that Powell has stated he won’t leave the Fed while the Justice Department investigates the renovation project.

Powell has characterized the investigation as a pretext to undermine the Federal Reserve’s independence in setting monetary policy. For months, Trump has expressed a desire to remove Powell, claiming he has been too slow to implement interest rate cuts that would stimulate the U.S. economy.

This situation unfolds as the Supreme Court is simultaneously weighing Trump’s attempt to remove another central bank governor, Lisa Cook. Lower courts have thus far allowed Cook to remain in her position while her legal challenge to the firing continues. During arguments in January, the Supreme Court appeared likely to permit her to stay at the Fed, with a decision expected soon.

The Supreme Court has previously allowed presidential firings of heads of other governmental agencies at the president’s discretion. However, the court has signaled a more cautious approach to the Federal Reserve’s independence, describing it as “a uniquely structured, quasi-private entity.”