DOJ Drops Probe into Fed Chair Powell, Clearing Path for Warsh Confirmation

Context The Department of Justice today closed its investigation into Federal Reserve Chairman Jerome Powell. This probe specifically concerned Powell's public remarks about renovations at the Fed's Washington headquarters. Many Republican lawmakers had previously deemed this inquiry baseless and politically motivated.

Key Facts U.S. Attorney for the District of Columbia Jeanine Pirro confirmed the investigation's closure. She stated, "I have directed my office to close our investigation as the IG undertakes this inquiry." The Federal Reserve inspector general will now assume oversight of the inquiry into the headquarters' renovation spending overruns. Senator Thom Tillis previously commented on the DOJ's handling of the matter, remarking that a U.S. attorney "fancied investigating Powell as a cute idea."

What It Means The Department of Justice's decision directly resolves a monthslong standoff that had imperiled a key White House nomination. Senator Thom Tillis, among other Republican lawmakers, had previously indicated that his support for Kevin Warsh's confirmation as Fed Chairman hinged on the DOJ ending its investigation into Powell. With the probe now concluded, Warsh's nomination can proceed without this specific impediment. If confirmed, Warsh advocates for a reduced central bank role in financial markets and a shrinking of the Federal Reserve's substantial balance sheet, which currently stands at approximately $4.2 trillion. He has also suggested a future with fewer public press conferences and speeches by the Federal Reserve. Financial markets and policy observers will now monitor the Senate confirmation process for Kevin Warsh closely as it moves forward.