The Justice Department is set to drop its criminal probe into Federal Reserve Chair Jerome Powell, sources told ABC News, potentially wrapping up the investigation as soon as Friday and ending a standoff that threatened to complicate the Fed’s leadership transition.
What happened
- Jeanine Pirro — who posted the announcement on X — said the U.S. Attorney’s office in Washington is directing its team to close the criminal investigation while the Fed’s inspector general conducts a parallel inquiry. “The IG has the authority to hold the Federal Reserve accountable to American taxpayers,” Pirro wrote, adding that she expects a “comprehensive report in short order.” She also warned the office could reopen a criminal probe if new facts warrant it.
- Senior DOJ officials have informed senators, including Senate Banking Committee member Republican Sen. Thom Tillis, of the plan to drop the probe. The DOJ intends to refer alleged cost-overrun issues tied to the Fed’s $2.5 billion Washington headquarters renovation to the Federal Reserve’s internal watchdog.
Why it matters
- The investigation centered on Powell’s Senate testimony about the renovation and marked an unusual escalation of political scrutiny on Fed officials. With Powell’s term ending in May, the probe had risked delaying confirmation of President Trump’s nominee to succeed him, Kevin Warsh.
- Powell has said he will remain in office until his successor is confirmed, reducing immediate leadership uncertainty at the Fed.
Implications for markets and crypto
- For crypto markets, central bank leadership and policy direction are important macro drivers. The expected closure of the DOJ criminal probe removes one source of political risk for the Fed in the short term, but the inspector general’s review — and the possibility the DOJ could restart its probe — mean uncertainty is not fully resolved.
- Traders and projects that track macro risk should watch the IG’s findings and the Senate confirmation timetable for signals about the Fed’s future leadership and policy priorities.
What to watch next
- The inspector general’s report and whether the DOJ ultimately reopens a criminal investigation.
- The Senate confirmation process for Kevin Warsh and any related political fallout that could influence markets.
Bottom line: The DOJ appears poised to step back from a criminal case that had put rare political pressure on the Fed, but an ongoing IG review and the potential for renewed action leave room for future developments that could still sway markets, including crypto.
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