DOJ Drops Criminal Probe of Fed Chair Powell, Likely Clearing Way for Warsh/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ The Justice Department has ended its criminal investigation into Federal Reserve Chair Jerome Powell, removing a major obstacle to Kevin Warsh’s Senate confirmation. Prosecutors had been examining the Federal Reserve’s headquarters renovation project but admitted they found little evidence of criminal wrongdoing. The decision could speed up Warsh’s confirmation as President Donald Trump’s choice to replace Powell when his term ends in May.
Powell Investigation Quick Looks
- DOJ ended its criminal probe into Fed Chair Jerome Powell
- The investigation focused on Federal Reserve building renovations
- Prosecutors previously admitted they found no clear evidence of a crime
- Judge James Boasberg criticized the subpoenas as unsupported
- Kevin Warsh’s confirmation may now move forward quickly
- Sen. Thom Tillis had blocked Warsh until the investigation ended
- Powell’s term as Fed chair ends on May 15
Deep Look
Justice Department Ends Probe Into Jerome Powell
WASHINGTON — The Justice Department has officially dropped its criminal investigation into Federal Reserve Chair Jerome Powell, removing one of the biggest political obstacles standing in the way of Kevin Warsh becoming the next leader of the central bank.
The investigation had focused on the Federal Reserve’s large-scale building renovation project at its Washington headquarters.
Instead, she said the Federal Reserve’s inspector general would handle further scrutiny of the renovation project.
That decision effectively closes a politically charged investigation that had struggled for months to produce evidence of criminal wrongdoing.
It also clears the path for the Senate to move more quickly on confirming Warsh, President Donald Trump’s nominee to replace Powell.
Probe Struggled to Find Evidence of a Crime
The case had become one of several Justice Department investigations involving individuals seen by Trump as political or policy adversaries.
However, prosecutors repeatedly struggled to establish a legal basis for criminal charges against Powell.
At a closed-door court hearing in March, the prosecutor handling the case admitted the government had not yet found evidence of a crime.
That admission became a major turning point.
Federal Judge James Boasberg later threw out subpoenas issued to the Federal Reserve and sharply criticized the prosecution’s case.
He said prosecutors had produced “essentially zero evidence” suggesting Powell committed a crime.
Boasberg also described the justification for the subpoenas as “thin and unsubstantiated.”
The judge’s criticism significantly weakened the case and increased pressure on prosecutors to back away.
Construction Site Visit Drew Additional Backlash
In a more recent incident, federal prosecutors made an unannounced visit to a construction site connected to the Fed headquarters project.
They were turned away.
The move triggered criticism from defense attorneys involved in the matter.
One lawyer described the visit as “not appropriate” and accused prosecutors of using improper tactics after failing to establish a stronger legal case.
The episode added to the growing perception that the investigation lacked substance and was becoming politically damaging rather than legally productive.
Friday’s decision to end the probe appears to bring that chapter to a close.
Kevin Warsh Now Faces Clearer Confirmation Path
The biggest immediate impact of the DOJ decision may be on Kevin Warsh’s confirmation process.
Warsh, a former Federal Reserve governor and longtime economic adviser, was nominated by Trump in January to replace Powell.
Powell’s term as chair is set to expire on May 15.
Senator Thom Tillis, a Republican from North Carolina, had previously said he would oppose Warsh’s confirmation until the Powell investigation was resolved.
That position effectively blocked progress because Republicans needed Tillis’ support to move the nomination smoothly through the Senate.
Now that the investigation has ended, the road appears much clearer for a confirmation vote.
That could happen quickly as the administration pushes to install new leadership at the Fed before Powell’s term expires.
Warsh Defends Fed Independence
Warsh has already faced tough questioning over whether he would remain independent from Trump if confirmed.
Trump has repeatedly pressured the Federal Reserve to cut interest rates, arguing lower borrowing costs would boost the economy and strengthen growth.
During Senate Banking Committee testimony earlier this week, Warsh directly addressed those concerns.
“The president never once asked me to commit to any particular interest rate decision, period,” Warsh said.
“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.”
His statement was designed to reassure lawmakers worried that the White House might try to influence monetary policy decisions.
Trump Signals He Wants Rate Cuts
Despite Warsh’s promise of independence, Trump made clear he still expects lower interest rates.
“I would,” Trump replied.
That blunt answer reinforced concerns among critics who fear the White House wants a more politically aligned Federal Reserve.
The issue of Fed independence has become central to the confirmation debate.
The Federal Reserve traditionally operates separately from direct political control, especially on interest rate decisions tied to inflation and employment.
Any perception of White House interference could shake investor confidence and financial markets.
Powell’s Exit Comes at a Critical Economic Moment
The leadership transition comes during a highly sensitive economic period.
Inflation remains above the Federal Reserve’s long-term 2% target, while oil prices, global instability, and war-related economic pressures continue shaping expectations around interest rates.
The Fed has paused additional rate cuts this year after making reductions at the end of 2025.
Markets are watching closely for signs of whether the next Fed chair will continue Powell’s cautious approach or move faster toward cuts.
That makes the Powell-to-Warsh transition one of the most closely watched economic shifts of Trump’s second term.
A Major Political and Economic Turning Point
By ending the Powell investigation, the Justice Department has not only closed a controversial legal battle but also reshaped the future leadership of the Federal Reserve.
Powell leaves office without criminal charges, after a probe that failed to prove wrongdoing.
Warsh now moves closer to taking over one of the most powerful economic positions in the world.
And Trump gains an opportunity to place his own chosen leader at the center of U.S. monetary policy.
With inflation, rates, and global instability dominating the economy, that decision could shape markets far beyond Washington.
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