DOJ DROPS POWELL PROBE, WARSH PATH CLEARS

The Justice Department on Friday closed its criminal investigation into Federal Reserve Chair Jerome Powell, bringing an abrupt end to one of the most politically charged episodes in the central bank's history and clearing the path for Kevin Warsh to be confirmed as Powell's successor.

U.S. Attorney Jeanine Pirro announced the decision in a post on social media, saying she had directed her office to close the probe and hand oversight of the matter to the Fed's inspector general, who will review cost overruns on the central bank's multibillion-dollar headquarters renovation in Washington, D.C.

A Probe Built on Political Pressure

The investigation, which burst into public view in January when Powell revealed the Fed had received grand jury subpoenas, centred on his 2025 congressional testimony about the renovation project. Powell called the probe politically motivated, saying the threat of criminal charges was a consequence of the Fed setting rates based on economic evidence rather than presidential preference.

In March, Chief Judge James Boasberg of the U.S. District Court for the District of Columbia quashed the subpoenas, writing that the government had produced "essentially zero evidence" of a crime and that the investigation appeared designed to pressure Powell into cutting rates or resigning. The DOJ asked Boasberg to reconsider, but he denied the request earlier this month.

Pirro warned that the matter is not entirely settled, stating she would "not hesitate to restart a criminal investigation should the facts warrant doing so." The Fed's Office of Inspector General said it has been evaluating the renovation project since July 2025 and is working to complete the review.

Warsh Confirmation Expected to Advance

The probe's closure removes the single biggest obstacle to confirming Warsh, whom Trump nominated in January to succeed Powell. Republican Sen. Thom Tillis, a member of the Senate Banking Committee, had blocked a committee vote on the nomination, calling the investigation "bogus" and refusing to advance Warsh until it ended. With Republicans holding a narrow 12-10 advantage on the panel, Tillis's dissent was enough to stall the process entirely.

The White House expressed confidence that the Senate will now move quickly. Warsh testified before the Banking Committee earlier this week, telling senators that central bank independence "is essential" and that Trump had never asked him to commit to rate cuts. He did, however, signal he favours a new inflation framework and fewer public communications from Fed officials — changes that could shift the institution's approach to monetary policy.

Powell's term as chair ends May 15. He had previously said he would remain in the role on a pro tem basis if no successor had been confirmed by then. With the investigation now closed and Warsh's hearing complete, a committee vote could come within days.

Markets have already priced in limited rate action for the remainder of 2026. The Fed held rates steady at 3.5–3.75% at its March meeting, and the median projection among officials pointed to just one cut this year. Whether Warsh, if confirmed, would push for more aggressive easing remains one of the key questions facing investors.

Sources:

CNBC — DOJ Drops Investigation of Fed Chair Powell

CBS News — Justice Department Drops Probe Into Fed Chair Jerome Powell

Yahoo Finance — DOJ Drops Investigation of Fed Chair Jerome Powell