DOJ ends probe of Powell, clearing path for Warsh

The Department of Justice ended a criminal investigation into Federal Reserve Chair Jerome Powell on Friday, removing a key barrier to Kevin Warsh’s nomination to lead the central bank. The inquiry concerned alleged cost overruns on a $2.5 billion renovation of the Fed’s Washington headquarters. The DOJ announced it will not pursue charges at this time.

Senator Thom Tillis of North Carolina had pledged to block any confirmation vote on Warsh until the Justice Department closed the investigation. With the DOJ’s announcement, the Senate Banking Committee is expected to lift the procedural hold and schedule a committee vote on the nomination.

The inquiry examined whether the renovation project exceeded its budget in ways that warranted criminal scrutiny. Jeanine Pirro posted on X that she would “not hesitate to restart a criminal investigation should the facts warrant doing so.”

The White House responded that it remains confident the Senate will confirm Warsh. White House spokesman Kush Desai posted on X that the administration expects the chamber to “swiftly confirm Kevin Warsh as the next Federal Reserve Chairman to finally restore competence and confidence in Fed decision-making.” Prediction markets shifted sharply after the DOJ announcement: Kalshi prices rose to about an 84% chance of confirmation before Powell’s scheduled May 15 departure, and Polymarket users placed odds near 77% as of this writing.

Warsh, 56, disclosed substantial personal wealth and a wide range of investments in his confirmation filings. The disclosures list stakes in several crypto-related companies and funds, including dYdX, Polymarket, Polychain Capital, Dapper Labs, Solana and Optimism, and report at least $100 million held in a single investment fund. At his confirmation hearing, Warsh said “digital assets are already part of the fabric of our financial services industry in the United States” and called a Federal Reserve–issued central bank digital currency “bad policy.”

Warsh served as a Federal Reserve governor from 2006 to 2011 and earlier worked as special assistant to the president for economic policy. He is currently a professor at Stanford University. His nomination has drawn criticism from some Democrats. Senator Elizabeth Warren called Warsh a “sock puppet” for President Trump and warned that placing him at the Fed could give the president improper access to the central bank’s authorities.

Powell has defended the Fed’s independence, saying presidential criticism reflects the Fed setting interest rates based on its assessment of what will serve the public rather than following the president’s preferences. With the DOJ probe concluded, the Senate Banking Committee is likely to resume consideration of Warsh’s nomination, which could lead to a full Senate confirmation vote in the coming weeks.