Senator Tillis Holds Fed Nominations Until DOJ Probe Concludes

This analysis examines Senator Thom Tillis’s (R-NC) continued hold on all Federal Reserve nominations until the Department of Justice concludes its criminal investigation into Fed Chair Jerome Powell. The investigation centers on Powell’s testimony regarding the $2.5 billion Fed headquarters renovation project. Tillis made these comments on Bloomberg Surveillance on February 13, 2026, describing the DOJ probe as a “flex” designed to force the current chair to step aside [1].

The political standoff creates significant uncertainty around the Fed’s leadership transition. Powell’s term expires in May 2026, and Kevin Warsh—President Trump’s nominee to replace Powell—cannot proceed through confirmation hearings while Tillis maintains his hold. Treasury Secretary Scott Bessent attempted to broker a compromise by suggesting the investigation be moved to the Senate Banking Committee, but Tillis rejected this approach as insufficient [3].

Market data from February 12, 2026 shows significant volatility, with the NASDAQ down 2.36% and the Russell 2000 down 2.58% [0]. While multiple factors contribute to market movements, the uncertainty surrounding Fed leadership transition adds another layer of complexity for investors already concerned about interest rate trajectory and economic policy direction.

Senator Tillis has stated he has seven GOP senators on the Banking Committee who believe Powell did not commit a crime [2]. This suggests growing Republican skepticism about the DOJ investigation’s merits, framing it more as political maneuvering than genuine oversight.

Tillis explicitly stated that “vindictive prosecution is wrong, period” and warned that the probe threatens the Fed’s long-standing independence [2]. This concern transcends the immediate political dispute and speaks to broader institutional integrity questions.

With Powell’s term expiring in May 2026, the current timeline leaves limited window for confirmed leadership transition. If the DOJ probe extends beyond this period, the Fed could face a leadership vacuum during a economically sensitive period.

Despite the political uncertainty, traders continue pricing in a 50% probability of three rate cuts in 2026, suggesting market participants expect the Fed’s policy trajectory to remain relatively stable regardless of leadership changes [5].

• Leadership Vacuum Risk:
  Tillis’s hold could extend well into 2026, potentially leaving the Fed without confirmed leadership after Powell’s term ends in May 2026. This could create policy uncertainty during a critical economic period.

• Market Volatility:
  The confirmation process deadlock adds to existing market uncertainty around interest rate path and economic policy direction. Market volatility increased significantly on February 12, 2026 [0].

• Institutional Credibility:
  Prolonged political interference in the Fed nomination process could undermine the central bank’s perceived independence, potentially impacting market confidence in U.S. monetary policy.

• Compromise Potential:
  Treasury Secretary Bessent’s offer to move the probe to the Senate Banking Committee indicates ongoing negotiation channels [3]. A bipartisan resolution could emerge if sufficient political pressure builds.

• Bipartisan Opposition:
  The fact that seven GOP senators share Tillis’s skepticism about the investigation suggests potential for building a coalition that could pressure for probe conclusion or dismissal.

Senator Thom Tillis is maintaining his hold on all Federal Reserve nominations until the DOJ drops its criminal investigation into Fed Chair Jerome Powell’s testimony about the $2.5 billion headquarters renovation. The investigation, which Tillis characterizes as a political “flex” to force Powell’s resignation, has blocked Kevin Warsh’s confirmation as Fed chair and created uncertainty around the central bank’s leadership transition.

The Fed is currently in a “hawkish pause” with rates at 3.5%-3.75%, and traders are pricing in 50% odds of three rate cuts in 2026 [5]. Market volatility increased significantly on February 12, with the NASDAQ down 2.36% [0]. Tillis has garnered support from at least seven GOP senators who believe Powell did not commit a crime, suggesting potential growing Republican opposition to the investigation. Treasury Secretary Bessent’s suggestion to move the probe to the Senate Banking Committee was rejected by Tillis as insufficient [3].

The key catalysts to monitor include the DOJ probe’s timeline and any potential compromise arrangements that could allow the confirmation process to proceed.