DOJ Drops Powell Probe, Easing Kevin Warsh Path to Fed Chair

Key Point

The DOJ closed its criminal investigation into Federal Reserve Chair Jerome Powell on Friday and referred the Fed building renovation matter to the central bank's inspector general. Attorney General Jeanine Pirro said her office could restart a criminal investigation if the facts warrant it. The move removed the condition Republican Senator Thom Tillis had set for supporting Kevin Warsh, and Kalshi odds of Warsh's confirmation before May 15 rose from about 30% to more than 80%. Warsh told senators he would act independently of the White House, while Senator Elizabeth Warren said the DOJ move was meant to clear his path and noted the administration is still pursuing Fed Governor Lisa Cook in court.

Market Sentiment

Neutral, Policy-driven.

Reason: The DOJ ended the Powell probe, which may raise the odds of a Fed leadership change without creating an immediate policy decision.

Similar Past Cases

This type of Fed leadership story usually moves markets through expectations rather than instant policy changes. This case could matter more if Senate timing turns the nomination into a near-term test of future rate policy.

Ripple Effect

This story could feed into rate expectations first, because a smoother path for Warsh may change how traders frame future Fed decisions and financial regulation. If Senate Republicans move quickly, then risk assets may start reacting to leadership expectations before any formal policy change occurs.

Opportunities & Risks

Opportunities: The main watchpoint is whether the Senate moves Warsh to a final vote before May 15, because a faster process could make Fed leadership expectations a nearer-term macro input.

Risks: The key risk is that the inspector general review or Senate opposition slows the process again, which would leave this as a political signal rather than a confirmed policy shift.