Justice Department drops criminal probe of Fed chair Jerome Powell, likely paving the way for Kevin Warsh

The US Justice Department has ended its probe into Federal Reserve chair Jerome Powell, clearing a major roadblock to the confirmation of his successor Kevin Warsh. US Attorney for the District of Columbia Jeannine Pirro said on Friday that her office was ending its probe into the Fed’s extensive building renovations because the Fed’s inspector general would scrutinise them instead.

Pirro wrote on X that the Fed’s inspector general has instead been asked to look into potential cost overruns in the central bank's renovation of its Washington, D.C., headquarters.

“Accordingly, I have directed my office to close our investigation as the IG undertakes this inquiry,” she wrote.

Also Read: RBI cancels licence of Paytm Payments Bank, to seek its winding up in court

Move could lead to swift confirmation by Senate for Kevin Warsh

The move could lead to a swift confirmation vote by the Senate for Warsh, a former top Fed official whom President Donald Trump, a Republican, nominated in January to replace Powell. Powell’s term as chair ends May 15.

Sen. Thom Tillis, a North Carolina Republican, had said he would oppose Warsh until the investigation was resolved, effectively blocking his confirmation.

Republicans praised Warsh during a Tuesday hearing, but Democrats questioned his independence from Trump, the lack of transparency around some of his financial holdings, and his flip-flop on interest rates.

Also Read: US blockade of Iranian vessels to continue for ‘as long as it takes’: Defence Secretary Pete Hegseth

The investigation was among several undertaken by the Justice Department against Trump’s perceived adversaries. It had failed to gain traction for months as prosecutors struggled to articulate a basis to suspect criminal conduct.

A prosecutor handling the case conceded at a closed-door court hearing last month that the government hadn’t found any evidence of a crime. Consequently, a judge quashed the subpoenas issued to the Federal Reserve.

Also Read: Iran cleric wants Trump to apologise over Ali Khamenei killing, admit ‘mistake’ before world

‘Prosecutors produced essentially zero evidence to suspect Powell of crime’

The judge, James Boasberg, said prosecutors had produced “essentially zero evidence” to suspect Powell of a crime.

Warsh said during the Senate hearing earlier this week that he never promised the White House that he would cut interest rates, even as the president renewed his calls for the central bank to do so.

Also Read: Raghav Chadha, 2 other MPs quit Aam Aadmi Party, announce split with 2/3rd MPs joining BJP

“The president never once asked me to commit to any particular interest rate decision, period,” Kevin Warsh, a former top Fed official, said during questioning by the Senate Banking Committee. “Nor would I ever agree to do so if he had. ... I will be an independent actor if confirmed as chair of the Federal Reserve.”

The decision to abandon the investigation represents a rare pullback for a Justice Department that over the last year has moved aggressively, albeit unsuccessfully, to prosecute public figures the president does not like.