U.S. Department of Justice Ends Criminal Investigation of Powell, Clearing the Way for New Fed Chair

According to Reuters, the U.S. Department of Justice has concluded its criminal investigation into Federal Reserve Chair Jerome Powell, clearing a key obstacle for the confirmation of Kevin Warsh, the Fed chair nominee put forward by Trump.

The announcement was made by Jeanine Pirro, the U.S. Attorney for the District of Columbia, meaning that the judicial review process previously underway regarding the costs of the Federal Reserve’s Washington headquarters renovation project has been concluded in phases, and the relevant leads will no longer be pursued as criminal cases.

Subsequently, multiple figures—including senior U.S. Department of Justice officials and Republican Senator Thom Tillis of the Senate Banking Committee—said they would also abandon independent investigations in parallel, with follow-up oversight work handed over to the Fed’s internal inspector organization.

The Fed’s independent inspector general had conducted an audit of the building renovation costs in 2021. In light of the controversy and questions raised by this $2.5 billion project, Powell last year asked the inspector general to conduct a comprehensive re-examination again, to clarify the specific reasons behind the cost overruns.

Pirro said taxpayers have the right to know the truth about the billions of dollars in construction cost overruns, and she expects to receive the inspector general’s comprehensive investigative report as soon as possible. A White House spokesperson also previously said that taxpayers should receive clear answers regarding the Federal Reserve’s fiscal mismanagement issues.

Powell’s term is set to end next month, but he said in March that he would remain in office until the new chair receives Senate confirmation. Tillis had previously publicly announced that he would block Warsh’s confirmation process as a protest against the so-called “false” investigation into Powell.

Because Tillis holds a key role in the Senate Banking Committee, his obstruction prevented Warsh from moving from the committee to a full vote by the entire Senate. Now that the DOJ investigation has been terminated, the move is expected to clear a key obstacle for Warsh’s path to taking office.

In addition, pressure from the Trump administration on Powell has been longstanding—from repeatedly urging interest-rate cuts and accusing him of “incompetence,” to launching an investigation through the Department of Justice—reflecting dissatisfaction with the Federal Reserve’s monetary policy. The signals Warsh had previously released appear, in turn, to align more closely with Trump’s policy demands.

Overall, this power game over #FedChair nominee is essentially a tug-of-war over the boundary of power between the president and the central bank, and its outcome is expected to have a profound impact on the future direction of U.S. cryptocurrency policy.