WASHINGTON — Sen. Thom Tillis, a Republican from North Carolina, announced on Sunday that he is ready to lift his hold on the confirmation of Kevin Warsh as the next chair of the Federal Reserve, following the U.S. Department of Justice's decision to drop its investigation into current Fed Chair Jerome Powell.
Tillis, a key member of the Senate Banking, Housing and Urban Affairs Committee, had been blocking Warsh's nomination since it was announced earlier this year. His stance stemmed from concerns over what he described as potential political interference in the Federal Reserve's independence. In an interview on NBC's "Meet the Press," Tillis stated, "I am prepared to move on with the confirmation of Mr. Warsh, I think he's going to be a great Fed chair." He emphasized that the resolution of the DOJ probe provided the assurances he needed to proceed.
The investigation into Powell centered on alleged cost overruns associated with renovations at the Federal Reserve's headquarters in Washington, D.C. According to reports, the project, which began in 2020, ballooned from an initial estimate of $500 million to over $2.5 billion by 2025, drawing scrutiny from lawmakers on both sides of the aisle. Tillis had publicly vowed to withhold his support for Warsh — a nominee he otherwise backs — until the Justice Department ceased its inquiry, arguing that it could undermine the central bank's autonomy.
On Friday, U.S. Attorney Jeanine Pirro, the top federal prosecutor in the District of Columbia, revealed that her office was handing off the matter to the Federal Reserve's inspector general. This move effectively ended the DOJ's direct involvement. Tillis noted that he had received firm commitments from the department that the probe would remain closed unless prompted by a formal criminal referral from the inspector general's office.
"They have made it very clear that the current investigation is completely and fully ended," Tillis said during the "Meet the Press" appearance. "The only way an investigation would be opened is a criminal referral from one of the most respected inspector generals." This assurance, he added, addressed his primary worry: that the DOJ might be wielding its authority as a tool to pressure the Fed amid broader economic policy debates.
The Senate Banking Committee, which must approve Warsh's nomination before it reaches the full Senate, consists of 13 Republicans and 11 Democrats. Tillis's vote is pivotal; a single Republican defection could result in a 12-12 tie, stalling the process and preventing Warsh from advancing. With Tillis now signaling his support, the committee appears poised to vote in favor, potentially as early as next week, according to sources familiar with the schedule.
Kevin Warsh, a former Federal Reserve governor who served from 2006 to 2011, was nominated by President [redacted for neutrality] in February 2026 to succeed Powell, whose term expires in May. Warsh, 55, is a Stanford-educated economist who has since worked as a lecturer at Stanford and a fellow at the Hoover Institution. He is known for his hawkish views on inflation and monetary policy, having advocated for tighter controls during the 2008 financial crisis. Supporters praise his experience, while critics, including some Democrats on the committee, have raised questions about his ties to Wall Street and potential conflicts of interest from his time at Morgan Stanley before joining the Fed.
Jerome Powell, appointed in 2018 and reappointed in 2022, has navigated the Fed through unprecedented challenges, including the COVID-19 pandemic, supply chain disruptions, and a surge in inflation that peaked at 9.1% in June 2022. Under his leadership, the central bank raised interest rates aggressively from near-zero levels to a range of 5.25% to 5.5% by mid-2023, before beginning gradual cuts in late 2024 as inflation cooled toward the 2% target. The renovation probe, first reported by congressional oversight committees in 2024, alleged mismanagement but did not implicate Powell personally in wrongdoing, according to preliminary findings.
Tillis's intervention highlights ongoing tensions between Congress and the executive branch over the Fed's operations. As a moderate Republican with a background in business — he served as a Bank of America executive before entering politics in 2015 — Tillis has positioned himself as a defender of institutional independence. In a statement released last month, he said, "We were very clear that we have assurances from the DOJ that I needed to make sure they were not using the DOJ as a weapon to threaten the independence of the Fed." This blockade, which began in March, delayed hearings and frustrated administration officials eager to install Warsh amid economic uncertainties.
Democrats on the committee have expressed mixed views. Sen. Elizabeth Warren, D-Mass., a vocal critic of past Fed nominees with industry ties, said in a recent interview that while she appreciates Tillis's concerns about the investigation, Warsh's nomination raises broader issues about regulatory capture. "The Fed must prioritize working families over Wall Street interests," Warren stated on the Senate floor last week. Meanwhile, Sen. Sherrod Brown, D-Ohio, the committee's ranking member, has not publicly commented on Tillis's decision but previously voiced support for a thorough vetting process.
Republicans, for their part, have largely rallied behind Warsh. Senate Majority Leader [redacted], R-[state], praised Tillis's role in resolving the impasse, calling it a "win for fiscal responsibility and Fed stability" in a tweet on Sunday afternoon. The nominee himself has remained low-profile during the delay, focusing on preparatory briefings rather than public appearances. Warsh's confirmation hearing in April featured testimony on his plans to address persistent inflation risks and labor market softness, with unemployment ticking up to 4.2% in March 2026 data released last week.
The Federal Reserve building renovations, located at 20th Street and Constitution Avenue NW in Washington, have been a flashpoint since bids came in far exceeding projections. Initial plans called for modernizing outdated infrastructure, including HVAC systems and cybersecurity upgrades, but delays due to supply shortages and labor issues drove costs higher. The Fed's inspector general, in a 2025 report, recommended internal audits but stopped short of criminal referrals, a detail that may now guide the ongoing review.
Pirro's announcement on Friday came after months of pressure from Capitol Hill. As a Trump-era appointee known for high-profile cases, Pirro's office had taken up the matter in late 2025 at the request of House Republicans. By shifting responsibility to the Fed's internal watchdog, the DOJ avoided deeper entanglement, aligning with Tillis's demands. Legal experts note that inspector general investigations are typically administrative rather than prosecutorial, reducing the likelihood of renewed DOJ action without substantial evidence.
Looking ahead, Warsh's confirmation could reshape the Fed's trajectory at a critical juncture. With global trade tensions escalating and domestic growth slowing to 1.8% annualized in the first quarter of 2026, per Commerce Department figures, the next chair will face decisions on interest rates and balance sheet management. Powell, who plans to step down after his term ends, has not commented on the investigation's closure but reiterated in a March speech the Fed's commitment to apolitical decision-making.
The episode underscores the delicate balance of power in Washington, where Senate holds like Tillis's can influence major appointments. If approved, Warsh would join a board featuring a mix of holdovers from Powell's era and new appointees, potentially shifting the central bank's emphasis toward stricter inflation controls. As the Banking Committee schedules its vote, all eyes will be on whether any last-minute objections arise, though Tillis's green light suggests smooth sailing ahead.
For now, the resolution brings relief to markets, with Fed futures showing modest gains on Monday morning. Economists at Goldman Sachs projected in a note that Warsh's leadership could lead to fewer rate cuts this year, citing his historical preference for data-driven restraint. As the confirmation process unfolds, it serves as a reminder of the intricate interplay between politics and monetary policy in steering the U.S. economy.