Trump Drops Prosecution Against Fed Chair Jerome Powell and Prepares His Succession: Kevin Warsh Positioned to Take Over

The US Justice Department has closed the criminal investigation targeting Jerome Powell, chair of the Federal Reserve. The move is widely read as a signal that Powell will be replaced before the end of his term, set to expire in May 2026. Kevin Warsh, a former Fed governor who served between 2006 and 2011 and is described as close to the presidential circle, has emerged as the leading candidate to succeed him.

In the short term, financial markets reacted positively, anticipating a more accommodative monetary policy. The sequence — an investigation opened, then dropped as Powell's departure took shape — nonetheless fuels a broader debate over the balance between executive power and the monetary institution.

The underlying stakes touch on central bank independence, established since the 1980s as a cornerstone of the global financial architecture. A Fed seen as dependent on political power could, over time, weaken confidence in the dollar as a reserve currency, on which a large share of international trade and foreign exchange reserves rely.

The meaning of the episode remains disputed. Some actors see it as a weaponization of the justice system in service of an agenda on interest rates, and a worrying precedent; others, more pragmatic, consider Warsh experienced and hold that what matters most is clarity on the succession. Several analyses recall that the investigation had been initiated by the Washington prosecutor before the Justice Department took back control. The May 2026 deadline also leaves open the question of whether an early departure was even necessary.