DOJ Ends Powell Probe, Boosting Kevin Warsh’s Fed Chair Confirmation Odds

The U.S. Department of Justice (DOJ) has officially dropped its investigation into Federal Reserve Chair Jerome Powell over the central bank’s building cost overruns, a move that could significantly accelerate the confirmation of Kevin Warsh as the next Fed chair. This development has quickly shifted political momentum in Washington, especially as Powell’s term is set to expire on May 15.

U.S. Attorney Jeanine Pirro announced the decision in a post on X, stating that the DOJ has closed its probe while the Federal Reserve’s Inspector General continues its own review of the renovation expenses. However, Pirro noted that the DOJ remains open to reopening a criminal investigation if new evidence emerges. The initial probe stemmed from Powell’s congressional testimony regarding rising renovation costs, which sparked controversy months ago.

At the time, Powell suggested that the investigation may have been politically motivated, pointing to tensions between the Federal Open Market Committee (FOMC) and former President Donald Trump over interest rate policies. Powell had also indicated he would remain on the Federal Reserve Board until the DOJ concluded its inquiry, adding further weight to the investigation’s outcome.

The closure of the probe is particularly important for Kevin Warsh’s confirmation process. Several Republican senators, including Thom Tillis, had previously expressed reluctance to support Warsh while the investigation into Powell remained active. With that obstacle removed, Warsh’s path to becoming the next Federal Reserve Chair appears clearer.

Market sentiment has responded swiftly. According to Polymarket data, the probability of Warsh being confirmed by May 15 surged to 75%, up sharply from earlier lows of 28%. Warsh recently reaffirmed his commitment to Federal Reserve independence during his Senate Banking Committee hearing, despite ongoing political pressure for rate cuts.

Analysts now suggest that the Senate has sufficient time to advance Warsh’s nomination before Powell’s term ends. If confirmed on schedule, the upcoming FOMC meeting could mark Powell’s final appearance as chair, signaling a major transition in U.S. monetary policy leadership.