The Department of Justice on Friday dropped its criminal investigation of Federal Reserve Chair Jerome Powell, removing a major hurdle to the Senate confirming President Donald Trump's nomination of Kevin Warsh to replace him.

U.S. Attorney Jeanine Pirro, the top federal prosecutor in the District of Columbia, said she was abandoning the probe in a post on X. Her announcement came three days after Warsh testified before the Senate Banking Committee on his nomination.

Pirro had said just Wednesday that she was committed to continuing the criminal probe, which had been crippled by a federal judge's ruling quashing subpoenas her office issued to the Fed.

Sen. Thom Tillis, a North Carolina Republican and Banking Committee member, had an effective hold on the full Senate from voting to confirm Warsh as Fed chair unless the criminal investigation ended.

Pirro, in her announcement dropping the probe, said that instead of her office, the Federal Reserve's inspector general "has been asked this morning" to investigate cost overruns in the multi-billion-dollar renovation of the central bank's headquarters in Washington.

She has claimed the renovation — which the Fed IG has been investigating since last summer — and Powell's testimony about the project to the Banking Committee was her reason for investigating the Fed chief.

Powell and others had said that the real reason for Pirro's probe was to pressure him and the Fed to lower interest rates as Trump wanted.

Powell had asked the inspector general in July 2025 to review the renovation project after Trump criticized its cost.

He noted at the time that the IG conducted an audit in 2021 to assess the Fed Board's "process for planning and managing multiple renovation projects as well as procuring services under various renovation-related contracts."

An IG spokesperson in a statement to CNBC on Friday said the IG is "actively working to complete" an "evaluation of the Board's building renovation project," and that it would make the results of that investigation available to the public and Congress when it is done.

Pirro in her X post said, "The IG has the authority to hold the Federal Reserve accountable to American taxpayers."

"I expect a comprehensive report in short order and am confident the outcome will assist in resolving, once and for all, the questions that led this office to issue subpoenas," she said.

"Accordingly, I have directed my office to close our investigation as the IG undertakes this inquiry," Pirro said.

"Note well, however, that I will not hesitate to restart a criminal investigation should the facts warrant doing so."

White House spokesman Kush Desai, in a statement, said, "American taxpayers deserve answers about the Federal Reserve's fiscal mismanagement, and the Office of the Inspector General's more powerful authorities best position it to get to the bottom of the matter."

"The White House remains as confident as before that the Senate will swiftly confirm Kevin Warsh as the next Federal Reserve Chairman to finally restore competence and confidence in Fed decision-making," Desai said.

The Federal Reserve declined to comment.

CNBC has requested comment from Pirro's office, Warsh, and Tillis, as well as Senate Banking Committee Chairman Tim Scott, R-S.C., and other members of that committee.

Earlier this week, Scott, R-S.C., advocated ending the criminal probe and turning the matter over to Congress.

In a CNBC interview, Scott said that switching responsibility for the investigation from Pirro's office was essential to getting Warsh confirmed as chair, adding that any findings about the renovation could be made publicly available after a review was complete.Scott suggested that the Banking panel could work with the House Financial Services Committee to "establish a committee that would have permanent oversight of construction projects within the jurisdiction of the Banking Committee.""Wherever that leads us, we should go. If that leads to a criminal referral, so be it," Scott said. "But give us Kevin Warsh at the Fed so that we have access to all the information necessary.

Scott also said he thought Powell "was incompetent, not criminal."

Sen. Elizabeth Warren of Massachusetts, the top-ranking Democrat on the Banking Committee, said the abandonment of the Powell investigation "is just an attempt to clear the path for Senate Republicans to install President Trump's sock puppet Kevin Warsh as Fed Chair."

"Let's be clear what the Justice Department announced today: they threatened to restart the bogus criminal investigation into Fed Chair Powell at any time while failing to drop their ridiculous criminal probe against Governor Lisa Cook," Warren said.

Trump last summer sought to fire Cook, who, like Powell, had resisted his demands to cut interest rates, after an official in his administration claimed that she had made false statements on mortgage applications.

Cook denied those allegations and filed a lawsuit seeking to block her termination. She has remained on the Fed's Board of Governors as the Supreme Court considers her case.

"Anyone who believes Donald Trump's corrupt scheme to take over the Fed is over is fooling themselves," Warren said. "The Senate should not proceed with the nomination of Kevin Warsh."