Justice Department Ends Probe of Fed Chair Powell, Clearing Path for Warsh Confirmation

In brief

• The Department of Justice ended its criminal investigation into Federal Reserve Chair Jerome Powell on Friday, clearing the path for Kevin Warsh's confirmation vote.
• Senator Thom Tillis (R-NC) had blocked Warsh's nomination pending the probe's resolution, calling the investigation "bogus."
• Warsh disclosed holdings in multiple crypto projects including Solana and Polymarket during confirmation proceedings.

The Department of Justice ended its criminal investigation into Federal Reserve Chair Jerome Powell on Friday, removing a key obstacle that had blocked Senate action on Kevin Warsh's nomination as the next central bank leader.

The DOJ probe centered on alleged cost overruns during a $2.5 billion renovation of the Fed's Washington headquarters. North Carolina Republican Thom Tillis, who serves on the Senate Banking Committee, had vowed to block any confirmation vote until investigators closed the case, calling the probe "bonus."

"Tillis won," said one unnamed Republican senator, according to Politico, which reported the Banking Committee could hold its vote on Warsh next week.

U.S. Attorney Jeanine Pirro warned in an X post she would "not hesitate to restart a criminal investigation should the facts warrant doing so.” White House spokesman Kush Desai said in an X post that the administration remains "confident" the Senate will "swiftly confirm Kevin Warsh as the next Federal Reserve Chairman to finally restore competence and confidence in Fed decision-making."

The DOJ's decision shifted prediction market bets dramatically. Traders on Kalshi now price 84% odds of Warsh's confirmation before Powell's May 15 departure, up from about 30% before Friday's announcement. Polymarket users put odds of confirmation by May 15 at 77%, as of this writing.

Warsh has disclosed dozens of crypto startup holdings in his financial disclosures, including stakes in dYdX, Polymarket, Polychain Capital, Dapper Labs, Solana, and Optimism. During his confirmation hearing, he told senators that "digital assets are already part of the fabric of our financial services industry in the United States," while opposing any Federal Reserve-issued (or CBDC, aka a “digital dollar”) as "bad policy."