Executive Summary
The U.S. Department of Justice has formally ended its criminal investigation into Federal Reserve Chair Jerome Powell. U.S. Attorney Jeanine Pirro announced the closure and the transfer of the matter to the Fed’s inspector general for a final report. With the probe gone, Senate leaders are poised to move quickly on the confirmation of former governor Kevin Warsh, whose appointment could reshape monetary policy before Powell steps down on May 15.
What Happened
On April 28, 2026, Jeanine Pirro, the U.S. Attorney for the District of Columbia, disclosed that the DOJ’s criminal probe into Jerome Powell is concluded. The investigation, launched in January over alleged cost overruns on a $2.5 billion renovation of the Federal Reserve’s Washington headquarters, failed to produce evidence of wrongdoing. Judge James Boasberg had already dismissed DOJ subpoenas in March, citing a lack of evidentiary basis.
Following the closure, the case will be handed to the Federal Reserve’s inspector general, who will compile a comprehensive report on the matter. Powell described the original investigation as a political weapon tied to the Fed’s interest‑rate decisions.
Background / Context
The probe emerged amid heightened scrutiny of the Federal Reserve’s post‑pandemic policy stance. Critics argued that the renovation costs signaled fiscal mismanagement, while supporters saw the investigation as an attempt to pressure the Fed on its interest‑rate path. The DOJ’s involvement was unusual for a matter concerning internal Fed operations, fueling speculation about political motives.
Senator Thom Tillis (R‑NC) had threatened to block the Senate confirmation of Kevin Warsh until the investigation was fully resolved, labeling the probe “bogus.” Warsh, a former Fed governor and Stanford professor, has positioned himself as a staunchly independent candidate who would separate monetary policy from White House influence.
Reactions
Republican leaders welcomed the DOJ’s decision, calling it a vindication of the Fed’s independence. Senator Tillis signaled that he will now support the confirmation process, emphasizing that the “political weapon” has been dismantled.
Democratic Senator Elizabeth Warren criticized Warsh’s nomination, branding him a “sock puppet” for former President Trump and questioning his commitment to consumer protections. Nonetheless, many colleagues noted his extensive experience on the Fed’s Board of Governors.
Jerome Powell, while not commenting directly on Warsh’s prospects, reiterated his belief that monetary policy should remain insulated from partisan pressures.
What It Means
The closure removes the most immediate political obstacle to Warsh’s confirmation. With Senate leadership expecting a swift committee vote and floor confirmation before Powell’s term ends on May 15, the Fed could see a change in chairmanship within weeks.
Warsh is widely regarded as more hawkish than Powell on inflation, having described the post‑pandemic rate approach as “the biggest policy error in 40 or 50 years.” If confirmed, his tenure is likely to emphasize a tighter monetary stance, potentially extending the period of restrictive rates.
For markets that have priced in the possibility of near‑term rate cuts, a Warsh chairmanship could delay liquidity‑driven rallies. Bitcoin, which has historically rallied on expectations of rate easing, may see reduced bullish pressure as investors reassess the timeline for monetary stimulus.
What Happens Next
The Senate Banking Committee is slated to hold a final vote within the next few days. Assuming a positive outcome, the full Senate will move to confirm Warsh before the end of May.
Meanwhile, the Federal Reserve’s inspector general will produce a detailed report on the renovation probe. The findings are expected to be released in the coming weeks and could further influence public perception of the Fed’s governance.
Should Warsh assume the chairmanship, his policy outlook suggests a continuation of the current 3.5%–3.75% policy rate range, with a focus on curbing inflation rather than pursuing aggressive rate cuts.