Doj Drops Probe Tied To Fed, Potentially Easing Path For Warsh Confirmation

The U.S. Department of Justice (DOJ) on Friday dropped its investigation into the Federal Reserve regarding Jerome Powell’s congressional testimony on the central bank’s headquarters renovation. The decision could ease the path for Kevin Warsh‘s confirmation as Powell’s successor.

Jeanine Pirro, U.S. Attorney for the District of Columbia, announced that she’s closing the investigation and directing the Fed’s internal watchdog to review the matter.

“This morning the Inspector General for the Federal Reserve has been asked to scrutinize the building costs overruns — in the billions of dollars — that have been borne by taxpayers,” Pirro said in a post on X. “Accordingly, I have directed my office to close our investigation as the IG undertakes this inquiry. Note well, however, that I will not hesitate to restart a criminal investigation should the facts warrant doing so.”

The move comes days after Warsh, President Donald Trump’s nominee to serve as the 17th Fed chairman, faced sharp questioning at his Senate confirmation hearing. Warsh told lawmakers he would not be the president’s “sock puppet” on interest rate decisions.

During the hearing, Sen. Thom Tillis (R-N.C.) pledged to block any Fed nominees until the DOJ completed its probe of Powell. Tillis expressed disdain for the investigation while acknowledging Warsh’s “extraordinary credentials.”

The likelihood of Warsh’s confirmation stood at 85% before May 15 and 95% before June 1 as of 11 a.m. ET on Friday, according to the federally regulated prediction market Kalshi.

Meanwhile, data from the CME Group‘s FedWatch Tool on Friday shows a growing share of market participants who expect rate cuts starting in July, although most project rates will remain unchanged for the rest of the year.

In March, federal judge James E. Boasberg blocked DOJ subpoenas served to the Fed. He concluded the effort appeared designed to “harass and pressure” Powell to lower interest rates or resign.

Pirro called the decision “outrageous” and pledged to appeal. The judge later denied her office’s request to reconsider the ruling.

The DOJ served the Fed with grand jury subpoenas in January, threatening a criminal indictment against Powell. The dispute centered on Powell’s testimony regarding the Fed’s $2.5 billion headquarters renovation, but Powell stated in a video that the renovation concerns were merely a pretext for the subpoenas.

Editor’s note: This is a developing story and will be updated with more information.