Federal Reserve Chair Powell's criminal investigation has been dropped! The pathway for the new chair appointment is cleared, and U.S. bond yields are falling.

The U.S. Department of Justice announced the closure of its criminal investigation into Federal Reserve Chair Jerome Powell, transferring the headquarters renovation cost overrun case to the Inspector General. This move cleared the way for the appointment of his successor, Lael Brainard, and Senator Tillis immediately lifted his filibuster.

On April 24, the DOJ’s Columbia District Prosecutor Jeanine Pirro announced on X platform that the criminal investigation into Fed Chair Jerome Powell had been officially closed, and the subsequent cost overrun issues of the Federal Reserve headquarters renovation project would be handled by the Fed Inspector General. This directly removed the confirmation obstacle for Fed Chair nominee Warsh in the Senate—Senator Thom Tillis had previously delayed Warsh’s confirmation vote citing that the Powell investigation was not withdrawn. According to CNBC reports, the market responded immediately: the 10-year U.S. Treasury yield dropped to 4.306%, and the 2-year yield fell over 4 basis points to 3.78%.

Event Timeline

Pirro’s Conditional Withdrawal

Pirro explicitly left a hint in her announcement: the DOJ’s withdrawal this time is a “phase of transferring the case to the Fed Inspector General,” not a full closure. She emphasized that after the Inspector General completes the internal investigation, the DOJ will review the results and reserves the right to “reopen criminal investigations if evidence warrants.”

Political Implications: Warsh’s appointment can proceed, but the DOJ still holds tools to restart investigations at any time. Democratic Senators Elizabeth Warren and Dick Durbin immediately issued a joint open letter questioning the timing and motives behind Pirro’s move.

Market Reaction

Following the announcement, U.S. bond yields immediately declined, reflecting market relief over “less uncertainty about Fed Chair succession”:

• The 10-year Treasury yield fell over 1 basis point to 4.306%
• The 2-year Treasury yield dropped over 4 basis points to 3.78% (more directly reflecting short-term interest rate policy expectations)
• S&P 500 and Nasdaq hit new highs for the day, with some market participants interpreting Warsh as a relatively dovish Fed candidate

Powell’s Next Steps

Powell’s term ends in May 2026. After the DOJ withdrawal, whether Powell will stay on as a Federal Reserve Governor (his term runs until 2028) has become a new market focus. CNBC cited sources describing Powell faces an “important decision”—if he chooses to leave, it would give Trump another nomination opportunity for the Fed Board.

Update as of 4/25: Senate Banking Committee scheduled vote

Within 24 hours of Pirro’s withdrawal, the Senate Banking Committee scheduled a vote on Warsh’s appointment for April 29 (Wednesday). The committee leans 12–10 in favor with Republicans, but just one Republican senator defecting could block the nomination. Tillis’s decision to lift his filibuster after the DOJ investigation was withdrawn is key to this fast-track confirmation process. If approved by the committee, the full Senate will consider Warsh’s appointment.

Structural Signal: The Gray Area of Fed Independence

This event highlights an ongoing issue in recent years: how the Fed’s political independence is maintained between “presidential nominations” and “judicial investigation tools.” Even though the investigation has been withdrawn, concerns about whether “administrative agencies will continue to pressure the Fed through investigation tools” have not fully dissipated. The first FOMC meeting after Warsh’s appointment will be a critical point for the market to verify these concerns.

• This article is reprinted with permission from: 《Chain News》
• Original title: “DOJ Withdraws Criminal Investigation into Fed Chair Powell: Warsh Confirmation Path Fully Open, U.S. Treasury Yields Immediately Drop”
• Original author: Elponcrab