President Trump's control over US financial policy has taken a significant step forward after his Department of Justice dropped an investigation into Federal Reserve Chair Jerome Powell, potentially clearing the way for Trump's nominee, Kevin Warsh, to take the reins. Warsh, who has significant personal wealth, including crypto assets, is awaiting a final Senate vote after a confirmation hearing.
Trump had chosen Warsh to replace Powell, whom he has criticized for maintaining high US interest rates. However, Republican Senator Thom Tillis had threatened to block Warsh's confirmation as long as the DOJ pursued the investigation into Powell over cost overruns in a Fed building project. The investigation was dropped on Friday, with the DOJ asking the Fed's inspector general to investigate and issue a report.
This development has increased the likelihood of Warsh's confirmation, with prediction markets indicating an over 80% chance of confirmation before May 15. The move allows Trump to exert greater influence over US monetary policy and leaves him with more allies on the Fed board, which will make decisions on financial policy, including rules governing the crypto industry. Senator Elizabeth Warren criticized the move, calling it an attempt to clear the path for Warsh's confirmation, while Senator Tillis expressed support for Warsh, saying he would vote yes once the DOJ dropped the investigation into Powell.