The DOJ Just Dropped Its Investigation Into the Fed Chair. The Whole Thing Was Always Suspect.
The big picture: A federal judge said Trump’s DOJ had “essentially zero evidence” of any crime by Fed Chair Jerome Powell — and “a mountain of evidence” that the investigation was a pressure campaign to force him to resign or cut rates. The DOJ ignored the ruling and kept going anyway. Senator Thom Tillis finally forced their hand by blocking Trump’s replacement nominee. The DOJ caved Friday. Trump’s pick, Kevin Warsh, could be confirmed within two weeks.
Why it matters: This is one of the most direct attempts in modern American history to politicize the Federal Reserve. The fact that a single Republican senator was the only thing standing in the way of Trump’s plan tells you exactly how thin the guardrails are.
How we got here
Trump appointed Powell in his first term. Powell’s term as Fed Chair expires May 15. For months, Trump has demanded Powell resign — and threatened to fire him — because Powell won’t cut rates to the levels Trump wants. Federal law only allows removal for serious offenses, not policy disputes.
The bogus investigation
When threats didn’t work, Trump’s DOJ launched a criminal investigation into Powell over a $2.5 billion Fed renovation that went over budget. A federal judge ruled the DOJ had “produced essentially zero evidence” of any crime AND “a mountain of evidence” the subpoenas were being used to pressure Powell. The judge blocked the subpoenas. The DOJ kept going.
The Tillis stand
Senate Majority Leader Thom Tillis announced he would block Trump’s Fed Chair nominee — Kevin Warsh — until the DOJ dropped what he called the “bogus” probe. Tillis’s hold effectively froze the entire confirmation timeline. On Friday, DOJ prosecutor Jeanine Pirro announced the investigation was over. She caveated that she could restart it “should the facts warrant” — and asked the Fed’s Inspector General to review the cost overruns. The Fed’s IG was already investigating it at Powell’s direction. A 2021 review already found no wrongdoing.
The next two weeks
Tillis says he received “assurances” from the DOJ that they wouldn’t restart the probe unless the IG made a criminal referral. The Senate Banking Committee has scheduled a vote on Warsh for Wednesday. He needs to clear committee, then the floor — all before Powell’s May 15 term expiration. Warsh’s hearing already raised serious concerns: $100M+ in undisclosed assets, Trump openly saying Warsh will deliver lower rates, and Elizabeth Warren calling him Trump’s “sock puppet.”
By the numbers
May 15 — Powell’s term as Fed Chair expires
~2 weeks — until that deadline
$2.5 billion — Fed renovation that prompted the investigation
0 — evidence of crimes the judge said the DOJ produced
1 — Republican senator (Tillis) who forced the DOJ to back down
1 — Wednesday committee vote that determines what happens next
The bottom line
A bogus investigation, a federal judge’s rebuke, a single Republican holdout, and a hand-picked rate-cutter waiting in the wings. The Fed’s independence is the kind of structural feature that’s easy to take for granted until it’s gone. We’re watching whether it survives in real time.
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