The criminal investigation into Federal Reserve Chair Powell has been dropped! The path to appoint a new chair has been cleared, and U.S. bond yields fall

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

On April 24, DOJ Prosecutor Jeanine Pirro announced on X platform that the criminal investigation into Fed Chair Jerome Powell has been officially closed, and the subsequent cost overrun issue of the Federal Reserve headquarters renovation project will 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in the Senate—Senator Thom Tillis had previously delayed Warsh’s confirmation vote citing “Powell investigation not withdrawn.” According to CNBC reports, markets reacted 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 Case Closure

Pirro explicitly left a hint in her announcement: the DOJ’s case closure is a “phase of transferring the matter to the Fed Inspector General,” not a full resolution. She emphasized that after the Inspector General completes its internal investigation, the DOJ will review the findings and retains 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. Treasury yields immediately declined, reflecting market relief over “less uncertainty regarding 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 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’s case closure, 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.

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

Within 24 hours of Pirro’s case withdrawal, the Senate Banking Committee scheduled a vote on Warsh’s appointment for April 29 (Wednesday). The committee leans 12–10 in favor, but just one Republican senator defecting could block the nomination. Tillis’s lifting of his hold after DOJ dropped the investigation was key to enabling a fast-track confirmation process. If approved by the committee, the full Senate will vote on 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 amid “presidential nominations” and “judicial investigation tools.” Even though the investigation has been dropped, concerns about whether “administrative agencies will continue to pressure the Fed through investigations” remain. The first Federal Open Market Committee (FOMC) meeting after Warsh’s appointment will be a key market test of 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 Drop Immediately”
• Original author: Elponcrab