DOJ Ends Probe of Fed Chair Powell, Paving Way for Kevin Warsh's Confirmation

DOJ Closes Criminal Investigation into Jerome Powell

The U.S. Department of Justice (DOJ) terminated its criminal probe into Federal Reserve Chair Jerome Powell on Friday, eliminating the last major hurdle to the Senate confirmation of Kevin Warsh as the central bank’s next leader. The decision carries significant implications for future monetary policy and the Bitcoin market.

Probe Over Fed Headquarters Renovation Closed

U.S. Attorney for the District of Columbia Jeanine Pirro announced the closure of the investigation, which originated from alleged cost overruns on a $2.5 billion renovation of the Fed’s Washington headquarters. Pirro stated she would transfer the matter to the Fed’s inspector general, requesting “a comprehensive report in short order.” She did not rule out reopening criminal proceedings if new evidence emerges.

The investigation was deemed legally unsound after a federal judge, James Boasberg, dismissed DOJ subpoenas in March. A prosecutor admitted the government had found “essentially zero evidence” of a crime, calling the justification “thin and unsubstantiated.”

Powell Calls Probe a Political Weapon

Powell has consistently criticized the investigation as politically motivated. In January, he stated that it was “a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President.”

Senate Confirmation of Warsh Now Likely

Senator Thom Tillis, a North Carolina Republican on the Senate Banking Committee, had pledged to block Warsh’s confirmation until the probe concluded, labeling it “bogus.” His opposition, combined with unified Democratic resistance, had stalled the nomination. With the investigation now closed, leadership expects a swift committee vote and floor confirmation before Powell’s term expires on May 15.

Warsh Pledges Independence from White House

On Tuesday, Kevin Warsh, 56, a former Fed governor and Stanford professor, testified before the Senate Banking Committee. He emphasized his commitment to “strict independence” from the White House on interest rate decisions, stating:

“The president never once asked me to commit to any particular interest rate decision, period.”

While Senator Elizabeth Warren dismissed Warsh as a “sock puppet” for former President Trump, Republicans praised his qualifications and hawkish stance on inflation.

Bitcoin’s Future Hinges on Fed Policy Under Warsh

Bitcoin’s price has fluctuated between $70,000 and $92,000 this year as the Fed maintained interest rates at 3.5%–3.75%. Traders closely monitor the central bank’s signals, as lower rates historically drive capital toward risk assets like Bitcoin.

When the DOJ launched its probe in January, Bitcoin surged toward $92,000 as institutional investors interpreted the attack on the Fed as a threat to dollar credibility and a potential catalyst for rate cuts.

Warsh is considered more hawkish than Powell, having criticized the Fed’s post-pandemic rate hikes as “the biggest policy error in 40 or 50 years.” If he assumes leadership on May 15 and maintains a restrictive monetary policy, Bitcoin investors betting on rate-cut-driven liquidity expansion may face prolonged delays.