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The Justice Department has concluded its investigation into Federal Reserve Chair Jerome Powell, removing a significant obstacle to the confirmation of his nominated successor, Kevin Warsh. U.S. Attorney for the District of Columbia Jeannine Pirro announced Friday on social media platform X that her office was ending the probe into the Fed’s building renovations, with oversight now shifting to the Fed’s inspector general.
This development clears the way for Warsh’s confirmation process to move forward. Senator Thom Tillis, a Republican from North Carolina who had previously withheld support pending resolution of the investigation, may now reconsider his position. Powell’s term as chair is set to conclude on May 15, creating some urgency for the transition.
Warsh, a former Federal Reserve official nominated by President Donald Trump in January, received generally positive reception from Republicans during Tuesday’s Senate hearing. Democrats, however, expressed concerns about his independence from Trump, transparency regarding his financial holdings, and perceived inconsistencies in his positions on interest rate policy.
The investigation into Powell was one of several Justice Department probes targeting individuals perceived as adversaries of Trump. The inquiry had struggled to gain momentum, with prosecutors unable to clearly articulate a basis for criminal suspicion. During a closed-door court hearing in March, a prosecutor admitted the government had not discovered evidence of criminal activity.
Federal Judge James Boasberg subsequently invalidated subpoenas issued to the Federal Reserve, criticizing prosecutors for producing “essentially zero evidence” to suspect Powell of wrongdoing. The judge described the justification for the subpoenas as “thin and unsubstantiated.”
In a more recent development that further illustrated the investigation’s challenges, prosecutors made an unannounced visit to a construction site at Fed headquarters but were denied access, prompting criticism from a defense attorney who called the approach inappropriate.
During Tuesday’s Senate hearing, Warsh addressed concerns about his independence, stating unequivocally that he had made no promises to the White House regarding interest rate decisions. “The president never once asked me to commit to any particular interest rate decision, period,” Warsh testified. “Nor would I ever agree to do so if he had… I will be an independent actor if confirmed as chair of the Federal Reserve.”
Warsh’s statements came just hours after President Trump told CNBC he would be “disappointed” if Warsh didn’t immediately cut interest rates upon taking office. This timing highlighted the tension between the Fed’s mandated independence and political pressure from the White House.
The decision to abandon the Powell investigation represents an unusual retreat for a Justice Department that has aggressively pursued cases against figures viewed unfavorably by the president, albeit with limited success. The resolution of this matter could accelerate Warsh’s confirmation process, potentially following the precedent of Trump’s previous Fed appointee, Stephen Miran, who received Senate approval just 13 days after nomination.
Financial markets are closely watching this leadership transition at the world’s most influential central bank. The Fed’s policies on interest rates and economic oversight have profound implications for global markets, inflation management, and economic growth. Under Powell, the Fed has navigated the economic challenges of the COVID-19 pandemic, subsequent inflation pressures, and the delicate balance of monetary tightening.
As of Friday, Robert Hur, attorney for the Federal Reserve Board of Governors, had not responded to requests for comment on the Justice Department’s decision to end its investigation.
The Federal Reserve, established in 1913, serves as the central banking system of the United States, responsible for conducting monetary policy, supervising banking institutions, maintaining financial stability, and providing financial services to depository institutions, the U.S. government, and foreign official institutions.
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8 Comments
Removing the cloud of this criminal probe is a relief, but Warsh’s confirmation process will be critical. His stance on key issues like interest rates and financial regulations will be closely watched.
This investigation has been a distraction, and I’m glad it’s now resolved. The focus should be on ensuring a seamless leadership transition at the Fed to maintain stability in uncertain economic times.
The end of the criminal probe against Powell is a positive step, but the confirmation process for Warsh will be crucial. His policy positions and potential conflicts of interest need to be thoroughly examined before he’s granted such an important role.
Well said. The Fed chair must be able to make decisions in the best interest of the economy, not partisan politics.
It’s good to see the criminal investigation into Powell’s actions concluded. Now the focus can shift to evaluating Warsh’s qualifications and ensuring he can maintain the Fed’s independence.
The end of the criminal probe against Powell is certainly welcome news. However, the concerns raised by Democrats about Warsh’s independence and transparency are understandable and worth scrutinizing further during the confirmation process.
Agreed. It’s important that the next Fed chair maintains the central bank’s independence and doesn’t become too beholden to political interests.
This is a positive development for the Fed and the broader economy. With the criminal probe concluded, the transition to Warsh’s leadership can now proceed more smoothly. Curious to see how Warsh’s confirmation process unfolds and what his policy approach will be.