DOJ Drops Powell Probe, Clearing Path for Kevin Warsh to Lead Federal Reserve

The Department of Justice has officially closed its criminal investigation into Federal Reserve Chair Jerome Powell, a move that effectively clears the way for the Senate to confirm Kevin Warsh as the next head of the U.S. central bank. The probe, which focused on cost overruns related to a Federal Reserve building project, had become a critical political flashpoint. Senator Thom Tillis had previously indicated he would block Warsh's confirmation as long as the DOJ continued its pursuit of Powell, citing concerns over the independence of the Federal Reserve. Attorney General Jeanine Pirro announced that the matter has been referred to the Fed's inspector general for a comprehensive report. While Pirro noted that the DOJ could restart the criminal probe if new facts warrant it, the immediate closure of the case has shifted the political landscape. Following the announcement, prediction markets on Kalshi saw the odds of Warsh's confirmation by May 15 surge from approximately 30% to over 80%. The potential installation of Kevin Warsh is being closely monitored by global markets. President Trump has frequently criticized Powell for maintaining high interest rates, and Warsh is viewed as a nominee who could facilitate the administration's economic goals. Additionally, Warsh's personal holdings in crypto-assets suggest a potential shift in how the Fed approaches stablecoin issuers and digital asset regulation. The move has drawn sharp criticism from Democratic lawmakers. Senator Elizabeth Warren dismissed the DOJ's action as an attempt to install a political ally, while noting that the administration continues to pursue Fed Governor Lisa Cook in court.