DOJ Ends Investigation of Fed Chair Powell, Paving Way for Warsh Confirmation
By John Nada·Apr 24, 2026·7 min read
The DOJ has closed its investigation into Fed Chair Jerome Powell, enabling Kevin Warsh's Senate confirmation. This shift raises questions about future Fed policy and oversight.
The Department of Justice has discontinued its criminal investigation into Federal Reserve Chair Jerome Powell, significantly clearing the path for the Senate to confirm Kevin Warsh as his successor. This decision came after U.S. Attorney Jeanine Pirro announced the closure of the probe, which had been a major obstacle for Warsh's nomination, particularly due to the hold placed by Senator Thom Tillis.
U.S. Attorney Pirro's announcement on X came just three days after Warsh testified before the Senate Banking Committee regarding his nomination. The urgency of the situation was underscored by Pirro's previous commitment to continue the investigation, which had already been hindered by a federal judge's ruling quashing subpoenas that her office had issued to the Federal Reserve. Senator Thom Tillis, a Republican from North Carolina and a member of the Banking Committee, had effectively placed a hold on any confirmation vote for Warsh until the criminal investigation was resolved.
Pirro stated that the Federal Reserve's inspector general has now been assigned to investigate cost overruns associated with a multi-billion-dollar renovation of the Fed's Washington headquarters. This renovation project has been scrutinized since last summer, and it was the basis for Pirro's investigation into Powell, which critics claim was politically charged. Powell and others suggested that the real motivation behind the investigation was to pressure him and the Federal Reserve into lowering interest rates, aligning with former President Trump's public demands.
In July 2025, Powell had requested a review of the renovation costs after Trump publicly criticized them. Powell noted that the inspector general had previously conducted an audit in 2021 to assess the Fed Board's processes for planning and managing renovation projects, as well as the procurement of related services. A spokesperson from the inspector general's office indicated that they are actively working to complete their evaluation of the renovation project and will make the results available to the public and Congress once finalized.
Despite the DOJ's dismissal of the criminal probe, Pirro emphasized her office's ability to reopen the investigation if the situation warranted it in the future. This statement has raised eyebrows and sparked mixed reactions in the Senate. Some senators, such as Elizabeth Warren, condemned the DOJ's move as a politically motivated effort to facilitate Warsh's confirmation. Warren characterized the decision as part of a larger scheme by Trump to exert control over the Federal Reserve, suggesting it undermines the institution's independence.
Kevin Warsh's nomination carries significant implications for the Federal Reserve's approach to monetary policy, particularly in the context of interest rates. The White House remains optimistic about Warsh's confirmation, asserting that his leadership could restore competence and confidence in the Fed's decision-making processes. This reflects an ongoing tension between the executive branch and the Fed, particularly regarding interest rate policies and the broader implications for economic stability.
The implications of this development extend beyond personnel changes at the Fed. It signals a potential shift in how the Federal Reserve may approach its responsibilities, especially in the face of political pressures. If Warsh is confirmed, observers will be keenly watching how he navigates the delicate balance between maintaining Fed independence and addressing the expectations of the current administration. The historical context of this situation is crucial; the Fed's independence has long been viewed as a cornerstone of its ability to make decisions based on economic conditions rather than political whims.
As the Senate Banking Committee prepares for the confirmation vote, the fallout from the DOJ's decision will likely reverberate through financial markets. Investors and analysts alike are attuned to how Warsh's leadership may influence monetary policy and, consequently, broader economic conditions. The potential for heightened scrutiny of Fed operations may also arise, depending on the findings of the inspector general's investigation into the renovation costs. Such scrutiny could lead to greater accountability for the Federal Reserve, but it also raises concerns about the politicization of its operations.
The intersection of politics and monetary policy remains a volatile space, and the confirmation of Kevin Warsh could herald a new chapter for the Federal Reserve amid ongoing challenges. The outcome of this nomination process will not only shape the Fed's future but also reflect the continued evolution of its role within the broader financial system.
As Warsh's confirmation hearing approaches, key players in the Senate Banking Committee are already expressing their views. Senator Tim Scott, the committee's chairman, previously advocated for ending the criminal probe and shifting the responsibility to Congress for oversight of the renovation project. He suggested that the Banking panel could collaborate with the House Financial Services Committee to establish a committee that would conduct permanent oversight of construction projects within the Banking Committee's jurisdiction. Scott emphasized the importance of obtaining Kevin Warsh's confirmation to ensure access to necessary information, stating, "Wherever that leads us, we should go. If that leads to a criminal referral, so be it. But give us Kevin Warsh at the Fed."
This push for oversight underscores the complicated relationship between political entities and the Federal Reserve. The notion of creating a committee to oversee construction projects could be seen as a way to enhance transparency and accountability. However, it also raises concerns about the potential encroachment on the Fed's operational independence. The idea that the Senate might take a more active role in overseeing the Fed's financial decisions and construction projects could have long-lasting implications for the institution.
On the other hand, Senator Elizabeth Warren has been vocal in her opposition to Warsh's nomination. She described the abandonment of the Powell investigation as a tactic to install what she termed "President Trump's sock puppet" as Fed Chair. Warren's criticism reflects a broader concern among some lawmakers regarding the influence of the executive branch on the Federal Reserve. She pointed out that the DOJ's decision to drop the Powell investigation may be linked to a broader narrative involving the treatment of other Federal Reserve officials, including Governor Lisa Cook, who faced scrutiny from Trump for resisting his demands on interest rates. Cook, who has remained on the Fed's Board of Governors despite Trump's efforts to have her removed, filed a lawsuit seeking to block her termination, illustrating the contentious atmosphere surrounding the Federal Reserve.
The stakes are high for Warsh's confirmation, as it represents more than just a change in leadership; it symbolizes the ongoing struggle over the Fed's independence and its role in shaping monetary policy amid political pressures. Financial markets are likely to react to any signs of instability during the confirmation process, as investors are sensitive to changes in the Fed's leadership and the potential implications for future interest rate policies.
As the situation develops, the Federal Reserve's inspector general's investigation into the renovation costs will be closely monitored. The findings from this investigation could have significant ramifications for the Fed's reputation and its ability to operate independently. The possibility of a politically charged environment surrounding the Fed emphasizes the need for a careful examination of how monetary policy is crafted and implemented in the future.
In this context, Warsh's potential confirmation could lead to a new era for the Federal Reserve, where the intersection of politics and monetary policy is scrutinized more intensely than ever before. The outcome of the nomination process will not only influence the direction of the Federal Reserve but also highlight the increasingly complex relationship between government oversight and central banking in America.