DOJ DROPS POWELL PROBE, CLEARING PATH FOR WARSH

WASHINGTON — In a move that significantly lowers the political temperature in the nation’s capital, the U.S. Justice Department announced Friday it is closing its criminal investigation into Federal Reserve Chair Jerome Powell. The decision effectively removes the final hurdle for President Donald Trump’s nominee, Kevin Warsh, to take the helm of the world’s most powerful central bank.

​The announcement was made by U.S. Attorney Jeanine Pirro, a staunch ally of the president, who stated that the inquiry into multi-billion dollar cost overruns at the Federal Reserve’s Washington headquarters would be handed over to the Fed’s internal watchdog.

​”The Inspector General has the authority to hold the Federal Reserve accountable to American taxpayers,” Pirro wrote in a social media post on Friday. “I have directed my office to close our investigation as the IG undertakes this inquiry.”

ADVERTISEMENT

​The closure brings a dramatic end to a months-long legal battle that many observers characterized as an unprecedented assault on the Fed’s independence. Critics, including several high-ranking lawmakers, argued the probe was a “thinly veiled” attempt to pressure Powell into lowering interest rates or resigning before his term expires on May 15.

​The investigation had reached a stalemate in the courts. In March, Chief U.S. District Judge James Boasberg quashed DOJ subpoenas, ruling that prosecutors had presented “essentially zero evidence” of criminal activity and suggesting the investigation was launched for an “improper purpose.”

​Beyond the courtroom, the probe created a legislative logjam. Senator Thom Tillis (R-NC), a key member of the Senate Banking Committee, had vowed to block Kevin Warsh’s confirmation until the “baseless” investigation into Powell was terminated. With the DOJ’s retreat, Tillis is expected to lift his blockade, paving the way for a swift confirmation vote for Warsh, a former Fed governor.

​Despite the move to close the file, Pirro maintained a firm stance, noting that her office “will not hesitate to restart a criminal investigation should the facts warrant doing so.”

​While the immediate legal threat to Powell has evaporated, the political fallout continues. Powell, whose term as chair is ending but who holds a separate seat on the Fed’s Board of Governors until 2028, has not yet clarified whether he will remain at the central bank once Warsh is confirmed.

​For now, the focus shifts to the Senate, where Warsh—described by supporters as “battle-tested”—is expected to be confirmed in time to oversee the June interest rate decision.