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

The U.S. Department of Justice announced the closure of the criminal investigation into Federal Reserve Chair Jerome Powell, handing over 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 Thom Tillis immediately lifted 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 issues 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in the Senate—Senator Thom Tillis had previously delayed Warsh’s confirmation vote citing “Powell investigation not withdrawn.”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, 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 Dismissal

Pirro explicitly left a hint in her announcement: the DOJ’s withdrawal 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 retains the right to “reopen the criminal investigation if evidence warrants.”

Political Implications: Warsh’s appointment can proceed, but the DOJ still holds the tool to restart the investigation 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 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 expectations)
• The 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 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 resign, 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 nomination for Wednesday, 4/29. The committee, controlled by Republicans 12–10, could still block the nomination if any Republican senator votes against. Tillis’s decision to lift his hold after the DOJ investigation was dropped is key to enabling a faster confirmation process. If the committee approves, 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 amid “presidential nominations” and “judicial investigation tools.” Even though the investigation has been dropped, concerns about whether the executive branch will continue to pressure the Fed through investigation tools have not fully dissipated. Warsh’s first FOMC meeting as Chair 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