DOJ Ends Investigation into Fed Chair Powell, Paving Way for Warsh
By John Nada·Apr 25, 2026·4 min read
The DOJ ends its probe into Jerome Powell, allowing Kevin Warsh's confirmation as Fed Chair, impacting crypto markets and future monetary policy.
The Department of Justice concluded its criminal investigation into Federal Reserve Chair Jerome Powell on Friday, clearing a significant barrier to Kevin Warsh's confirmation as the next Fed leader. This resolution removes a critical obstacle that had previously stalled Senate action on Warsh's nomination, particularly due to the influence of Senator Thom Tillis (R-NC), who had vowed to block any confirmation vote until the probe was resolved. Tillis referred to the investigation as "bogus," reflecting a sentiment among some lawmakers that the inquiry was politically motivated rather than grounded in substantive legal concerns.
The DOJ's inquiry centered on alleged cost overruns during a $2.5 billion renovation of the Federal Reserve's Washington headquarters. These allegations had raised questions about Powell's oversight and management of the Federal Reserve's operations. However, with the investigation now closed, the Senate Banking Committee is reportedly poised to hold its vote on Warsh as early as next week. According to Politico, one unnamed Republican senator remarked, "Tillis won," indicating the political maneuvering behind the scenes that has characterized this nomination process.
U.S. Attorney Jeanine Pirro, in a recent post on X, emphasized her readiness to reactivate the investigation should new facts emerge, a statement that underscores the complex nature of the legal landscape surrounding the Federal Reserve. Meanwhile, White House spokesman Kush Desai expressed confidence that the Senate would "swiftly confirm Kevin Warsh as the next Federal Reserve Chairman to finally restore competence and confidence in Fed decision-making."
The resolution of the DOJ investigation has had immediate repercussions in financial markets, dramatically shifting prediction market bets. Traders on platforms such as Kalshi now assign an 84% probability to Warsh's confirmation before Powell's scheduled departure on May 15, a significant increase from the approximately 30% likelihood recorded prior to the announcement. In a similar vein, users on Polymarket are currently placing the odds of confirmation at 77%, reflecting a newfound optimism regarding Warsh's prospects.
Warsh's financial disclosures have revealed extensive holdings in various crypto projects, including well-known entities like Solana and dYdX. This exposure to the cryptocurrency industry is noteworthy, particularly in light of his statements during confirmation hearings, where he characterized digital assets as integral to the U.S. financial services landscape. His position against a Federal Reserve-issued central bank digital currency (CBDC), which he labeled as "bad policy," adds another layer of complexity to his nomination, especially given the rapidly evolving nature of digital finance and its implications for monetary policy.
Additionally, Warsh's past tenure as a Fed governor from 2006 to 2011 positions him as a seasoned candidate familiar with the intricacies of central banking. His previous role as a special assistant to the president for economic policy further enhances his credentials. However, his nomination has not been without controversy. Senator Elizabeth Warren (D-MA) has emerged as a vocal critic, labeling Warsh a "sock puppet" for Trump and expressing concerns that his ties to the crypto industry could create conflicts of interest involving the Fed.
Warren's apprehensions are rooted in the potential for Warsh to leverage his position to benefit himself and his associates, particularly in relation to the burgeoning cryptocurrency sector. She raised alarms about the possibility of granting special accounts to his family's crypto ventures or facilitating bailouts for friends on Wall Street in times of distress. Such allegations highlight the intense scrutiny that Fed leadership nominations can attract, especially when intertwined with the fast-paced world of digital assets.
In contrast, Powell has consistently defended the Fed's independence, arguing that the institution's decisions should be guided by sound economic principles rather than political pressures. During previous testimonies, he remarked that criticism from the presidency regarding interest rate decisions is a natural consequence of the Fed's commitment to prioritizing public welfare over political preferences. This insistence on maintaining a nonpartisan approach to monetary policy underscores the challenges Warsh may face should he be confirmed.
As the Senate Banking Committee gears up for its vote, the implications of the DOJ's investigation closure extend beyond just Warsh's leadership prospects. The heightened market confidence reflects a broader desire for regulatory clarity as the financial landscape becomes increasingly intertwined with digital innovations. Warsh’s confirmation could herald a significant shift in Federal Reserve policy, particularly concerning digital assets and the potential development of regulatory frameworks for cryptocurrencies. With the stakes higher than ever, the outcome of this confirmation is likely to have lasting effects on both monetary policy and market dynamics in the U.S. economy.