DOJ Drops Criminal Probe of Fed Chair Powell
SkimNews Take
The abrupt closure of the criminal probe into Powell, coinciding with the S&P 500's rise, suggests market sentiment quickly incorporates political de-risking for preferred nominees.
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- DOJ (U.S. Attorney Jeanine Pirro for D.C.) directed her office to close the criminal probe into Fed Chair Jerome Powell, with the Federal Reserve Inspector General now taking over scrutiny of the central bank's building cost overruns
- A federal judge twice quashed DOJ subpoenas in the case, ruling the investigation was aimed at pressuring Powell to cut interest rates or resign at Trump's behest
- Senator Thom Tillis (R-N.C.) had blocked the confirmation of Trump's Fed pick Kevin Warsh until the probe was closed; the DOJ's move now opens the path for Warsh ahead of Powell's term expiring in three weeks
- Senator Elizabeth Warren (D-Mass.) said the DOJ 'threatened to restart the bogus criminal investigation into Fed Chair Powell at any time' while failing to drop the separate probe against Governor Lisa Cook
- Powell has said he has 'no intention of leaving the Board until the investigation is well and truly over, with transparency and finality' — a test the IG handoff may or may not satisfy
- The investigation stemmed from subpoenas Powell disclosed in January seeking records related to the Fed's multibillion-dollar building renovations; the government was examining whether Powell committed fraud and lied to Congress about the costs
Why it matters: The closure removes the named obstacle to Kevin Warsh's confirmation as Fed Chair, but Powell's term expires in three weeks and he has said he won't leave the board until the probe is 'well and truly over, with transparency and finality.' The IG handoff may or may not satisfy that test, leaving the Fed leadership transition unresolved.
