DOJ Drops Criminal Probe Into Fed Chair Powell, Clearing Path for Warsh Confirmation
The DOJ dropped its criminal investigation into Fed Chair Jerome Powell, removing a major hurdle to Trump's nomination of Kevin Warsh to replace Powell.
Objective Facts
The Department of Justice dropped its criminal investigation of Federal Reserve Chair Jerome Powell, removing a major hurdle to President Donald Trump's nomination of Kevin Warsh to replace Powell. Sen. Thom Tillis, a North Carolina Republican, had put an effective hold on the Senate confirming Warsh unless the criminal investigation of Powell was dropped. The Fed's inspector general will investigate cost overruns of the central bank's multibillion-dollar renovation of its headquarters in Washington, D.C. The Department of Justice launched a criminal investigation into the Fed chair in January after Trump spent months railing against Powell for not lowering interest rates faster, with Trump's complaints including accusations of impropriety and incompetence in Powell's leadership of the renovation. A judge, James Boasberg, said prosecutors had produced 'essentially zero evidence' to suspect Powell of a crime.
Left-Leaning Perspective
Sen. Elizabeth Warren of Massachusetts, the top-ranking Democrat on the Banking Committee, said the abandonment of the Powell investigation 'is just an attempt to clear the path for Senate Republicans to install President Trump's sock puppet Kevin Warsh as Fed Chair.' Warren's criticism centered on two core issues: the conditional nature of the DOJ's retreat and the continued pursuit of another Fed official. Warren noted 'they threatened to restart the bogus criminal investigation into Fed Chair Powell at any time while failing to drop their ridiculous criminal probe against Governor Lisa Cook.' Warren warned that having a sock puppet in charge of the Fed would give the President access to the Fed's powerful authorities to enrich himself, his family, and his Wall Street buddies, potentially meaning granting special accounts to his family's crypto company or bailouts to his friends on Wall Street, creating more opportunities for Trump's corruption. Left-leaning outlets and Democratic commentators framed the DOJ's decision as a politically driven reversal aimed solely at clearing Warsh's path. Democratic leaders like Warren characterized the move as part of Trump's 'corrupt scheme to take over the Fed,' asserting 'Anyone who believes Donald Trump's corrupt scheme to take over the Fed is over is fooling themselves.' The framing emphasized that the Trump administration had manufactured the investigation purely as pressure on Powell, and its abandonment proved the entire enterprise was without legal merit. Left-leaning coverage focused heavily on Warsh's stated independence claims while questioning whether he could resist presidential pressure. Warren's opening statement to the Banking Committee noted that when Trump's first term ended, Warsh was criticizing the Fed for cutting rates, but 'as soon as Donald Trump became President a second time, Warsh reversed himself once more and began shouting from the rooftops about how the Fed should cut interest rates. Evidently he learned his lesson. This time around he sucked up to Trump to snag his dream job.' This narrative omitted discussion of whether the renovation project cost increases had merit for legitimate inquiry.
Right-Leaning Perspective
Republican Senator Thom Tillis, who sits on the banking committee that approves Fed nominees, described the investigation as 'frivolious' and said he would vote to confirm Warsh once the probe ended, noting that if he put everyone in prison in the federal government who had a budget go over, 'we'd have to reserve an area roughly the size of Texas for a penal colony.' Tillis's position, while Republican, was framed as a defense of institutional integrity rather than partisan opposition to the investigation itself. South Carolina Republican Sen. Tim Scott, who chairs the panel charged with advancing Warsh's nomination, quickly welcomed the news, saying 'These serious concerns warrant scrutiny, and I'm pleased this matter is continuing to receive it' and 'I welcome the Inspector General's review and expect a full accounting of how these costs spiraled out of control,' also extending an invitation for the inspector general to brief the committee within the next 90 days. The Republican framing shifted the focus from criminal prosecution to administrative oversight, allowing Republicans to claim they still sought accountability while removing the DOJ blockade. White House spokesperson Kush Desai stated 'American taxpayers deserve answers about the Federal Reserve's fiscal mismanagement, and the Office of the Inspector General's more powerful authorities best position it to get to the bottom of the matter,' adding that 'The White House remains as confident as before that the Senate will swiftly confirm Kevin Warsh as the next Federal Reserve Chairman to finally restore competence and confidence in Fed decision-making.' The right's coverage emphasized fiscal mismanagement and the shift to a more appropriate investigative vehicle, avoiding discussion of whether the original criminal investigation had been appropriately pursued.
Deep Dive
The DOJ's decision to drop its investigation into Jerome Powell represents the culmination of months of tension between Trump's demands to pressure the Federal Reserve and institutional resistance to that pressure. The Department of Justice launched a criminal investigation into the Fed chair in January after Trump spent months railing against Powell for not lowering interest rates faster. A prosecutor handling the Powell case conceded at a closed-door court hearing in March that the government hadn't found any evidence of a crime, and a judge subsequently quashed subpoenas issued to the Federal Reserve, saying prosecutors had produced 'essentially zero evidence' to suspect Powell of a crime. What began as a criminal investigation into renovation cost overruns became widely recognized as a tool for political pressure. The decision to close the investigation and shift the matter to the Fed's inspector general represents a face-saving compromise: it allows the Trump administration to claim accountability is continuing while removing the obstacle that was blocking Warsh's confirmation. Sen. Thom Tillis, a North Carolina Republican, had put an effective hold on the Senate confirming Warsh unless the criminal investigation of Powell was dropped, making his vote the pivotal deciding factor. The Republican's stance was notable because it demonstrated that even within the GOP, there was concern about overtly using federal law enforcement to pressure the nation's central bank. Tillis's position—that he supported Warsh but opposed the investigation—created political cover for the administration's retreat while preserving the nominee's path. The inspector general review provides rhetorical continuity: the administration can claim oversight continues while eliminating the criminal probe that had failed to gain traction in court. After the inspector general completes his report, Pirro said her office will review it and could restart its criminal probe if warranted. The threat of restarting prosecution—which Democrats highlighted—technically preserves the pressure campaign while removing its immediate blocking mechanism. What remains unresolved is whether Powell will remain on the Fed's board after his term as chair expires May 15, and whether Warsh, once confirmed, will pursue the interest rate cuts Trump has publicly demanded. Powell has not said whether he will step down from the Fed's board, which is the group that collectively decides on interest rates, with his term as board member running until 2028, and Powell has said he would make that decision based on what he thinks is in the best interest of the institution and the people the Fed serves. The broader question of Fed independence—whether a central bank can resist sustained political pressure from a determined executive branch—remains the underlying tension, regardless of how this particular investigation was resolved.