Warsh May-15 odds jump to 86% as DOJ drops Powell probe

Prediction-market odds that Kevin Warsh will become Federal Reserve chair by May 15 jumped to 86% on Kalshi after the Justice Department ended its criminal investigation into Jerome Powell. CNBC said the same contract had been trading around 30% before the probe was dropped. Polymarket moved in the same direction, with odds of confirmation by May 15 rising to 81%. The market signal is simple: once the legal overhang was lifted, traders started treating Warsh's path as the base case rather than a contested outcome.

The catalyst was the Justice Department's decision to stop pursuing Powell over cost overruns tied to the Federal Reserve's Washington renovation project. In a Reuters report, U.S. Attorney Jeanine Pirro said she had directed her office to close the investigation and asked the Fed's inspector general to continue reviewing the project. Pirro wrote that the IG has the authority to hold the Fed accountable, while the inspector general's office said it was already examining substantial cost increases and overruns.

CNBC and Reuters both said the probe had become a practical obstacle to Warsh's confirmation because Sen. Thom Tillis had refused to advance the nomination while the case remained open. Reuters added that the Fed renovation budget now stands at $2.46B, about $1.1B above the amount originally allocated in 2020. The same report said Chief U.S. District Judge James Boasberg had found prosecutors showed essentially zero evidence that Powell committed a crime, a ruling that undercut the legal case and sharpened the political cost of keeping it alive.

• Kalshi odds for Warsh by May 15: 86%, up from about 30%
• Polymarket odds for Warsh by May 15: 81%
• Fed renovation budget: $2.46B
• Increase versus 2020 allocation: about $1.1B
• Senate Banking Committee briefing request: within 90 days

The broader stake is central-bank independence and rate credibility. Warsh has said Trump never asked him to commit to any specific rate decision, but the Powell investigation had become a live test of whether political pressure could be used to force leadership change at the Fed. With the criminal probe closed and oversight moved to the inspector general, the risk now shifts from courtroom escalation to Senate timing, messaging and whether Powell stays on the Board after his chair term expires.

What to watch next is whether Tillis formally clears the nomination path and whether the committee moves before May 15, when Powell's term as chair is due to end. Investors will also watch any inspector-general update on the renovation review because Pirro said the Justice Department could reopen the case if new facts emerge. For now, markets are pricing a cleaner handoff and less procedural friction around the Fed leadership transition.

Not investment advice. Verify all figures with primary sources before acting.