FILE: US Federal Reserve Board Chairman Jerome Powell speaks during a news conference following a Federal Open Market Committee (FOMC) meeting in Washington, DC, on Dec. 10, 2025.
The US Department of Justice said Friday it will drop a criminal probe into Federal Reserve chair Jerome Powell, a sharp pivot in an unprecedented investigation into the nation’s top central banker.
Why it matters: It opens the path for President Trump’s pick to lead the Fed, Kevin Warsh, to be confirmed to the post after a standoff with Sen. Thom Tillis (R-N.C.), who blocked confirmation until the investigation was closed.
In theory, the move allows enough time for Warsh to secure enough votes from the Senate Banking Committee and then the full Senate, to be sworn in when Powell’s term as chair comes to an end next month.
- “The White House remains as confident as before that the Senate will swiftly confirm Kevin Warsh as the next Federal Reserve Chairman to finally restore competence and confidence in Fed decision-making,” White House spokesman Kush Desai said on X.
- Still, Tillis has not yet indicated whether he is satisfied and ready to advance Warsh’s nomination through the banking committee.
“I have directed my office to close our investigation as the IG undertakes this inquiry,” the U.S. attorney for the District of Columbia, Jeanine Pirro, wrote on X.
- “This morning the Inspector General for the Federal Reserve has been asked to scrutinize the building costs overruns – in the billions of dollars – that have been borne by taxpayers,” Pirro wrote.
- “The IG has the authority to hold the Federal Reserve accountable to American taxpayers. I expect a comprehensive report in short order and am confident the outcome will assist in resolving, once and for all, the questions that led this office to issue subpoenas.”
Pirro’s move comes after a federal judge twice quashed DOJ subpoenas issued to Powell, saying that the investigation was aimed at pressuring Powell to yield to Trump to cut rates or resign.
Sen. Elizabeth Warren (D-Mass.) doubled down on her criticism of Warsh’s nomination.
- “Let’s be clear what the Justice Department announced today: they threatened to restart the bogus criminal investigation into Fed Chair Powell at any time while failing to drop their ridiculous criminal probe against Governor Lisa Cook,” Warren said in a statement, referring to President Trump’s attempt to fire the top Fed official.
- “The Senate should not proceed with the nomination of Kevin Warsh,” Warren said.
Powell disclosed in January that he had received subpoenas seeking records related to the central bank’s multibillion-dollar building renovations.
- The government was examining whether Powell had committed fraud and lied to Congress about those renovations.
It’s unclear whether the conclusion of the DOJ probe meets the test Powell laid out to leave the Fed board — a key question next week, when Powell will hold what appears to be his final press conference as the central bank’s leader.
- His term as chair expires in three weeks, but he can stay on as a governor through 2028.
- “I have no intention of leaving the Board until the investigation is well and truly over, with transparency and finality,” Powell said at a press conference.
- A Federal Reserve spokesperson did not immediately respond to a request for comment.
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