DOJ Ends Powell Probe, Clearing Path for Kevin Warsh’s Fed Confirmation

Washington, D.C. — The U.S. Department of Justice has closed its criminal investigation into Federal Reserve Chair Jerome Powell, a move that could remove a major political obstacle to the Senate confirmation of Kevin Warsh as the next head of the central bank.

The decision was announced by U.S. Attorney Jeanine Pirro, who said her office would end the probe connected to cost overruns in the renovation of the Federal Reserve’s headquarters. The matter is still expected to be reviewed by the Federal Reserve’s inspector general.

Investigation Closure Changes Fed Leadership Outlook

The investigation had become a key issue in Washington because it complicated the transition at the Federal Reserve. Powell’s term as Fed chair is scheduled to end on May 15, while Warsh, President Donald Trump’s nominee, has been waiting for Senate approval.

Republican Sen. Thom Tillis had reportedly withheld support for Warsh while the Justice Department probe remained active. With the criminal investigation now closed, analysts believe the confirmation process may move forward more smoothly.

Why Kevin Warsh’s Confirmation Matters

Kevin Warsh is a former Federal Reserve governor and has long been seen as a serious candidate for top economic roles. If confirmed, he would take charge of the Fed at a sensitive time for interest rates, inflation, market confidence, and U.S. economic policy.

The Federal Reserve plays a major role in setting monetary policy. Its decisions affect borrowing costs, mortgage rates, credit markets, business investment, and the strength of the U.S. dollar.

White House Says Accountability Still Matters

Although the Justice Department has ended its criminal inquiry, the White House said questions about spending at the Fed remain important. A White House spokesperson stated that taxpayers deserve answers about the renovation costs and said the inspector general is better positioned to continue reviewing the matter.

Powell’s Next Move Remains Unclear

Powell has said he may remain as chair temporarily until the Senate confirms a successor. He also has the option to stay on the Federal Reserve Board of Governors until 2028, even after his term as chair ends.

However, some policy analysts believe Powell may now choose to leave the central bank fully, especially if Warsh’s confirmation becomes likely. The situation remains politically sensitive because Fed independence is a major concern for both markets and lawmakers.

Democrats Raise Concerns About Fed Independence

Democrats on the Senate Banking Committee have questioned whether Warsh would remain independent from the White House. The issue is important because the Federal Reserve is expected to make decisions based on economic data, not political pressure.

Supporters of Warsh argue that his previous experience at the Fed gives him the background needed to lead the institution. Critics, however, are likely to focus on whether he would protect the central bank’s independence during a politically charged period.

Market Impact Could Be Significant

Investors will closely watch the confirmation process because a change in Fed leadership can influence expectations for interest rates and financial markets. Bond yields, stock indexes, mortgage rates, and the dollar may all react as traders assess Warsh’s likely policy approach.

If Warsh is confirmed quickly, he could lead the Fed’s June meeting. That would place him in charge during an important period for inflation data, labor-market trends, and future rate decisions.

What Happens Next

The Senate is expected to revisit Warsh’s nomination now that the Justice Department probe has been closed. If Republican opposition fades, the confirmation could advance more easily.

For now, the main questions are whether Powell will stay on the Fed board, how quickly the Senate will act, and whether Warsh can convince lawmakers and investors that he will lead the Federal Reserve independently.

Conclusion

The Justice Department’s decision to drop the probe into Jerome Powell marks a major turning point in the Federal Reserve leadership battle. It removes a key barrier to Kevin Warsh’s confirmation and could speed up the transition at the top of the U.S. central bank.

Still, the story is not over. The inspector general’s review, Powell’s future role, and the Senate’s final vote will all shape what comes next for the Federal Reserve and the broader U.S. economy.

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