The US Department of Justice, under President Donald Trump, has abandoned its investigation into Federal Reserve Chair Jerome Powell, bringing Trump's nominee to replace Powell, Kevin Warsh, one step closer to confirmation. Warsh, who has significant personal wealth, including cryptocurrency assets, has been awaiting a Senate vote after a recent confirmation hearing.
Trump, who has criticized Powell for maintaining high interest rates, selected Warsh to address this issue. However, Republican Senator Thom Tillis had vowed to block Warsh's confirmation as long as the DOJ pursued the investigation into Powell regarding cost overruns in a Fed building project.
The investigation was dropped, and the US Attorney for the District of Columbia, Jeanine Pirro, announced that the DOJ has asked the Fed's inspector general to investigate the matter and issue a report. Following this development, the odds of Warsh's confirmation before May 15 have surged from 30% to over 80%.
Pirro stated that she expects a comprehensive report soon and is confident that the outcome will resolve the questions that led to the investigation. Trump's ability to appoint his own people to the Federal Reserve would grant him greater influence over US monetary policy and provide him with more allies on the Fed board, particularly in decisions related to the crypto industry and stablecoin issuers. The Republican-majority Senate may now be able to expedite Warsh's confirmation, who assured during his hearing that he would act independently of White House direction.
Senator Elizabeth Warren, the ranking Democrat on the Senate Banking Committee, dismissed the move, noting that the administration is still pursuing Fed Governor Lisa Cook in court. Warren stated that this is an attempt to clear the path for Senate Republicans to install Warsh as Fed chair. Tillis expressed his support for Warsh, calling him a 'great nominee' and stating that he would vote in favor of Warsh once the DOJ drops its investigation into Powell.