Justice Department Drops Powell Probe, Clearing Path for Warsh Confirmation

WASHINGTON — The Justice Department has closed its criminal investigation into Federal Reserve Chair Jerome Powell, removing a significant political obstacle to the Senate confirmation of Kevin Warsh as Powell's successor, according to reports from multiple news outlets.

The decision ends an inquiry that had struggled for months to identify any basis for criminal conduct, according to PBS NewsHour. The investigation was among several undertaken by the Justice Department into individuals President Donald Trump has publicly criticized.

The closure paves the way for the Senate to move forward with confirming Warsh, Trump's nominee to lead the central bank, NPR reported. Warsh, a former Fed governor who served during the 2008 financial crisis, has been awaiting confirmation as questions surrounding Powell's legal status created uncertainty about the transition timeline.

Investigation Background

Prosecutors had struggled to articulate grounds to suspect criminal conduct by Powell, according to PBS NewsHour. The probe had failed to gain traction despite running for several months, raising questions among legal observers about its underlying justification.

The investigation's existence had created an unusual situation in which a sitting Federal Reserve chair faced criminal scrutiny while his nominated successor waited in the wings. Powell's term as chair was set to expire in May 2026, though he could have remained on the Fed's Board of Governors through 2028.

Trump and the Fed

Trump has maintained a contentious relationship with the Federal Reserve throughout his political career, frequently criticizing Powell—whom he initially appointed as Fed chair in 2018—over interest rate decisions. The president has long advocated for lower rates and accused Powell of undermining economic growth through monetary policy choices.

The Justice Department's decision to open investigations into Trump's perceived adversaries has drawn scrutiny from legal experts and civil liberties advocates, who have raised concerns about the politicization of federal law enforcement. The Powell probe was one of several such inquiries launched during Trump's current term.

Warsh Confirmation Outlook

With the investigation closed, Senate Banking Committee proceedings on Warsh's nomination can advance without the complication of an ongoing criminal probe into the current chair. Warsh served as a Fed governor from 2006 to 2011 and has been a vocal critic of some post-crisis monetary policies.

The Federal Reserve operates as an independent agency, though its leadership is appointed by the president and confirmed by the Senate. The central bank's independence has been a subject of debate, particularly as Trump has pushed for greater presidential influence over monetary policy decisions.

What we know: The Justice Department has dropped its criminal investigation into Jerome Powell after months of failing to identify grounds for prosecution. The closure removes a barrier to Kevin Warsh's Senate confirmation as Fed chair. What's unclear: The specific factors that led to the investigation's closure, the timeline for Warsh's confirmation vote, and whether Powell will remain on the Fed board after his term as chair expires.