Justice Department Ends Powell Probe, Clearing Path for Kevin Warsh at the Federal Reserve

The U.S. Justice Department has ended its criminal investigation into Federal Reserve Chair Jerome Powell, removing a major political and legal obstacle to Kevin Warsh’s possible confirmation as the next leader of the U.S. central bank. The decision shifts remaining questions about the Federal Reserve’s building renovation costs to the Fed’s inspector general instead of federal prosecutors.

DOJ Drops Investigation Into Jerome Powell

The investigation focused on cost overruns tied to a roughly $2.5 billion renovation project at the Federal Reserve’s Washington headquarters. According to reports, U.S. Attorney Jeanine Pirro said the Justice Department would close its probe because the Federal Reserve’s internal watchdog would continue reviewing the matter.

The move is important because the criminal inquiry had created uncertainty around Powell’s future and delayed the political process for confirming his potential successor. Powell has not been charged with a crime, and a federal judge had criticized earlier subpoenas connected to the probe, saying there was little evidence to support the investigation.

Why Kevin Warsh’s Path Is Now Clearer

Kevin Warsh, a former Federal Reserve governor, has been viewed as President Donald Trump’s preferred choice to replace Powell when Powell’s chair term ends on May 15, 2026. However, some Senate Republicans had been hesitant to move forward while the Powell investigation remained unresolved.

Senator Thom Tillis, a key Republican on the Senate Banking Committee, had reportedly withheld support until the Justice Department made a final decision. With the DOJ now stepping back, Warsh’s confirmation process may move ahead more smoothly.

Political Tension Around the Federal Reserve

The case became part of a larger conflict between the White House and the Federal Reserve. Trump has repeatedly pushed for lower interest rates, while Powell has defended the Fed’s independence in setting monetary policy. Critics argued that the investigation looked politically motivated, while DOJ officials said they were reviewing questions about the renovation project.

Powell had already asked the Fed’s inspector general to examine the renovation costs before the Justice Department closed its criminal probe. That means the financial review is not over, but it will now continue inside the Federal Reserve’s oversight system rather than through a criminal investigation.

What This Means for the Fed

The Justice Department’s decision could reduce pressure on the central bank at a sensitive moment for the U.S. economy. The Federal Reserve plays a key role in controlling inflation, guiding interest rates, and supporting financial stability. A leadership fight at the top of the Fed can affect markets because investors closely watch who will guide monetary policy.

If Warsh is confirmed, he would take over during a period of intense debate about interest rates, inflation, and the Fed’s independence. During his confirmation process, Warsh has said he would protect the central bank’s independence, though critics have questioned whether he would resist pressure from the White House.

Powell’s Next Step

Powell’s term as Fed chair ends in May 2026, but he may still be able to remain on the Federal Reserve Board of Governors after leaving the chair role. That could allow him to continue influencing Fed decisions, depending on what he chooses to do next.

For now, the end of the DOJ probe removes one of the biggest obstacles facing the transition at the Federal Reserve. It also gives Senate Republicans more room to move forward with Warsh’s nomination without waiting for a criminal case to be resolved.

Conclusion

The Justice Department’s decision to end its investigation into Jerome Powell marks a major turning point in the battle over the future of the Federal Reserve. While questions about renovation spending may still be reviewed by the Fed’s inspector general, the criminal probe is no longer blocking Kevin Warsh’s path toward confirmation.

The development could reshape U.S. monetary policy leadership at a critical time. It also highlights the continuing debate over whether the Federal Reserve can remain independent when political pressure over interest rates is rising.

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