U.S. Federal Reserve leadership path clears as DOJ drops Powell probe

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Fed leadership path clears

Highlights

Department of Justice ends its criminal probe into Powell over Fed building renovation costs, shifting review to the inspector general and removing a key procedural obstacle.
Kalshi prediction market shows odds of Warsh's confirmation as Fed Chair before May 15 rising from 30% to over 80% following DOJ announcement.
Warsh's likely confirmation would increase Trump's influence on U.S. monetary policy, while Democrats denounce the DOJ's move as politically motivated.

Probe handoff reshapes confirmation timeline

As first reported in statements posted on X by Attorney General Jeanine Pirro and lawmakers involved in the process, the Department of Justice closes its criminal investigation into Powell over cost overruns tied to a Federal Reserve building renovation and asks the Fed's inspector general to review the matter instead.

That change removes a key barrier for Warsh, whose nomination had been slowed after Republican Senator Thom Tillis said he would block confirmation while the DOJ continued pursuing Powell. Warsh appears before senators this week and is still awaiting a final Senate vote.

Pirro says she expects a comprehensive report quickly and says the department could reopen a criminal investigation if facts later justify doing so. After the news, prediction market Kalshi shows odds of Warsh being confirmed before May 15 jumping from about 30% to more than 80%.

Broader policy stakes for Trump and the Fed

Installing Warsh at the top of the central bank gives Trump greater sway over U.S. monetary policy after his repeated criticism of Powell for keeping interest rates too high. It also adds another ally to the Fed board as it handles wider financial policy questions, including rules affecting the crypto industry and stablecoin issuers.

Warsh tells senators during his hearing that he would act independently of the White House, but Democrats criticize the DOJ move as political. Senator Elizabeth Warren says the administration is trying to clear the way for Senate Republicans to install Warsh while still pursuing Fed Governor Lisa Cook in court.

Tillis calls Warsh a great nominee and says earlier this week that he is prepared to support him once the DOJ drops what he describes as a bogus investigation into Powell. With Republicans holding the Senate majority, the procedural path now appears more favorable for a quicker confirmation.

Our earlier coverage on the Justice Department ending its criminal probe into Fed Chair Jerome Powell explained that the case was handed off to the Federal Reserve’s inspector general to review alleged building-renovation cost overruns. We noted that the move removed a key political obstacle for Kevin Warsh’s nomination, since Senator Thom Tillis and other Republicans had signaled they would not advance the confirmation while the DOJ investigation remained open.

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