Bessent Reveals Fed Chair Selection Timeline Amid DOJ Investigation into Powell

Treasury Secretary Scott Bessent’s appearance on Fox Business’ “Kudlow” program on January 16, 2026, marks a significant development in the ongoing leadership transition at the Federal Reserve. Bessent confirmed that pre-interviews with all four Fed chair candidates have been completed, with Rick Rieder, Chief Investment Officer of BlackRock’s Global Fixed Income business, being the final candidate to interview [1]. This disclosure provides the first official timeline from the Trump administration regarding the highly anticipated Fed chair selection, which carries profound implications for U.S. monetary policy direction, inflation management, and market expectations around interest rates.

The timing of this announcement is particularly noteworthy given the confluence of multiple factors reshaping the Fed leadership landscape. Current Chair Jerome Powell’s term as chair expires on May 15, 2026, creating a firm deadline for the administration to install its preferred successor [2][3]. Simultaneously, the Department of Justice has initiated a criminal investigation into Powell, centering on approximately $2.5 billion in Fed building renovation costs—a development that some analysts view as potentially designed to create pressure on the sitting chair [1][2]. This dual-track situation of selection momentum and legal scrutiny has created an unprecedented moment of institutional uncertainty at the central bank.

The four finalists represent distinct philosophical approaches to monetary policy and varying degrees of alignment with the Trump administration’s economic priorities. Kevin Warsh, a former Fed Governor from 2006 to 2011 and former Morgan Stanley banker, has emerged as the betting market frontrunner with approximately 60% odds, according to recent market pricing [4]. His candidacy is notable because he previously served under Fed Chair Ben Bernanke and has maintained relationships with both moderate and conservative financial stakeholders. Warsh’s market positioning has surged particularly after signals suggesting Trump may prefer him over other candidates [4].

Kevin Hassett, Director of the National Economic Council and one of Trump’s most senior economic advisors, occupies the second position in betting markets at approximately 16% [4]. Hassett’s proximity to Trump and his role in shaping the administration’s economic agenda make him a technically strong contender, though his odds have declined relative to Warsh. Christopher Waller, a current Fed Governor known for his academic background in monetary economics and his advocacy for interest rate cuts, represents a more traditional central banking perspective. Rick Rieder, as BlackRock’s Global Fixed Income CIO, brings extensive market practitioner experience but was the last candidate to complete interviews, potentially placing him at a disadvantage in the selection process [1].

The DOJ investigation into Jerome Powell introduces a complex layer of institutional tension that extends beyond the normal transitions of Fed leadership. Powell’s term as governor extends until January 31, 2028, meaning he could remain at the Fed even after his chairmanship ends in May [2][3]. This possibility carries significant implications: if Powell stays on as a governor, he would become a potential swing vote on the Federal Open Market Committee, potentially limiting Trump’s ability to secure a majority of sympathetic voices on the policy-setting body [3]. Reuters analysis suggests Powell may have “an ace up his sleeve” to stymie Trump’s broader Fed shakeup through this mechanism [3].

Senate confirmation dynamics present another layer of complexity. At least two Republican senators, including Senator Thom Tillis, have publicly stated they will not vote on Fed nominees until the DOJ investigation is resolved [2][3]. This stance creates a potential bottleneck in the confirmation process, even if Trump announces his selection by month’s end. The intersection of legal investigation, Senate politics, and executive branch appointments has created a fluid situation where multiple scenarios remain possible depending on how each actor responds to evolving circumstances.

The Fed chair selection occurs at a critical juncture for U.S. monetary policy. Trump has publicly advocated for deeper interest rate cuts than the Fed has historically implemented, creating potential tension between the administration’s preferences and traditional Fed independence. The candidates under consideration span a spectrum from establishment Republicans like Warsh, who might prioritize continuity and measured policy changes, to loyalists like Hassett, who might be more aligned with aggressive rate-cutting agendas. The market implications of each potential selection could differ substantially, affecting everything from mortgage rates to corporate borrowing costs to dollar valuations.

The DOJ investigation into Powell raises fundamental questions about the independence of Federal Reserve leadership and the appropriate boundaries between political and monetary authorities. While investigations into potential misconduct are legitimate, the timing and political context have led some observers to question whether the probe represents genuine accountability or a mechanism for political pressure [1][2]. The precedent set by this episode could influence how future administrations interact with Fed leadership and how markets perceive the central bank’s autonomy.

The significant shift in betting market odds—Warsh moving to 60% while Hassett declined to 16%—provides insight into how financial participants are processing available information [4]. These markets aggregate diverse information streams and can sometimes foreshadow official decisions before announcements. However, betting market odds should be interpreted with appropriate caution, as they reflect aggregate speculation rather than definitive knowledge of the administration’s intentions.

The confirmation process faces material uncertainty due to the DOJ investigation and Senate Republican opposition. At minimum, this creates timing risk around when a new chair could be officially installed. Additionally, the investigation into Powell introduces legal and reputational risk for the transition, potentially complicating Powell’s potential continued role as governor. Market volatility around Fed leadership announcements could increase as the end-of-January deadline approaches, particularly if conflicting signals emerge from different branches of government.

The institutional risk of perceived political interference in Fed appointments could affect long-term market confidence in U.S. monetary policy frameworks. International investors and foreign central banks may adjust their U.S. asset allocations if they perceive diminished Fed independence, potentially affecting Treasury yields and currency valuations.

A clear and timely Fed chair selection, combined with a smooth confirmation process, could reduce policy uncertainty and provide markets with greater clarity about the monetary policy trajectory. Candidates with market practitioner experience, such as Rieder, might bring perspectives valued by financial markets if selected. The potential for a more decisive shift toward rate cuts, if favored by the new chair, could benefit interest-rate-sensitive sectors including housing and commercial real estate.

The situation also presents an opportunity for the administration to demonstrate commitment to legitimate institutional processes while pursuing its policy objectives, potentially building credibility with markets and international counterparts.

The selection of the next Federal Reserve chair represents one of the most consequential monetary policy decisions facing the Trump administration. Treasury Secretary Scott Bessent’s January 16, 2026 announcement confirms that final interviews with four candidates have been completed and an announcement is expected by month-end [1]. The four finalists—Kevin Warsh, Kevin Hassett, Christopher Waller, and Rick Rieder—represent distinct backgrounds and policy perspectives, with current betting market odds favoring Warsh at approximately 60% [4].

The ongoing DOJ criminal investigation into Chair Jerome Powell adds unprecedented complexity to the transition. Powell’s chair term expires May 15, 2026, but his governor term extends to January 31, 2028, potentially allowing him to remain at the Fed in a reduced capacity [2][3]. Senate Republican opposition to confirming nominees until the investigation resolves could delay the confirmation process regardless of who is selected.

Key dates to monitor include the end of January 2026 for the expected announcement, May 15, 2026 for the expiration of Powell’s chair term, and ongoing developments in the DOJ investigation that could influence both the selection process and confirmation timeline. Market participants should track public statements from the White House, Senate Banking Committee actions, and any further developments in the federal probe for indicators of how this situation may evolve.