DOJ Abandons Powell Probe, Clearing Path for Trump's Fed Pick Warsh

The Justice Department has dropped its investigation into Federal Reserve Chair Jerome Powell, a move that removes the primary institutional obstacle blocking Donald Trump's preferred candidate, Kevin Warsh, from ascending to the Fed's helm.

The DOJ transferred the Powell inquiry to the Fed's own Office of Inspector General, effectively dismantling the case that had complicated the White House's plans for reshaping the central bank's leadership. The decision represents a significant realignment of regulatory and political pressure around the Federal Reserve. Warsh, a former Fed governor with close ties to Trump's economic team, has long been viewed as the administration's preferred choice to lead monetary policy. The transfer of the investigation to an internal watchdog removes it from DOJ control, effectively neutralizing what had been a standing complication in any effort to remove or sideline Powell.

The development raises pressure on Powell's remaining tenure as chair. While the Fed Inspector General's office operates with some independence, critics have noted that internal oversight bodies face inherent limitations when investigating matters tied to the broader political executive branch's interests. Markets are now watching whether the White House moves quickly to formalize Warsh's nomination, or whether Powell's removal will occur through other channels. The episode underscores the deepening entanglement between the Fed's institutional autonomy and the political priorities of the administration.