The US Department of Justice is preparing to close its investigation into Federal Reserve Chair Jerome Powell, clearing a significant political hurdle for Kevin Warsh to succeed him at the helm of the US central bank.
US DoJ Set To Drop Powell Probe, Paving Way for Warsh as Fed Chair
24 April 2026 - 17:32 CEST
The decision, announced on 24 Apr by Jeanine Pirro, the US Attorney for the District of Columbia, directly addresses a core condition set by Thom Tillis (R-NC), a member of the Senate Banking Committee, who had threatened to derail the nomination.
Why this matters for markets
A smooth confirmation for Warsh could stabilize expectations around monetary policy at a time when investors watch the Fed's interest rate path closely for its impact on equities, bonds, the dollar and crypto assets. Warsh, a former Fed governor from 2006 to 2011 with experience navigating the 2008 financial crisis, is viewed as more market-oriented than Powell. His potential leadership could signal a shift toward policies favouring growth and reduced regulatory burden.
Tillis holds leverage on panel
During Warsh's confirmation hearing on 21 Apr before the Senate Banking Committee, Tillis made his stance explicit."I love the candidate," Tillis said. "I won't spend my five minutes asking him about his credentials, because he has them. I'll spend five minutes talking about a bogus investigation that's going to cause me to vote no, unless they end the investigation."
Without Tillis's support, the committee – evenly divided along party lines with his potential defection – risked a 12-12 deadlock, stalling the nomination. Democrats on the panel have pushed to delay proceedings, citing concerns over the probe's motivations and calling it "pretextual."
Powell vows to stay until resolved
Powell, a lawyer by training whose chair term ends on 15 May, addressed the succession in a recent press conference. He confirmed he would serve as Chair temporarily if needed, per longstanding legal precedent, and has no plans to step down from the Board of Governors while the investigation continues. His governor term runs until January 2028.
Renovation costs fuel controversy
The DOJ probe focuses on whether Powell accurately described the $2.5bn renovation of the Federal Reserve's headquarters in Washington during congressional testimony. The project, funded by the Fed rather than taxpayers, has seen costs rise from an initial $1.9bn estimate amid inflation, tariffs and unforeseen site conditions.
Next steps in confirmation
The Senate Banking Committee is expected to vote soon on advancing Warsh's nomination to the full Senate, where a simple majority would confirm him. A formal end to the DOJ probe would likely secure Tillis's vote and allow focus to shift to policy.
Democrats, led by Sen. Elizabeth Warren, have questioned Warsh's independence from the Trump administration and pressed for greater asset disclosures. Warsh has pledged to maintain the Fed's operational independence.
