The Trump administration's control over US economic policy has taken a significant step forward, as the Department of Justice has dropped its investigation into Federal Reserve Chair Jerome Powell. This move could pave the way for the confirmation of Kevin Warsh, Trump's nominee to replace Powell. Warsh, who has substantial personal wealth, including assets in the cryptocurrency space, has been awaiting a Senate vote after appearing at a confirmation hearing.
Trump has been critical of Powell's handling of interest rates and chose Warsh to address this issue. However, Republican Senator Thom Tillis had threatened to block Warsh's confirmation as long as the DOJ's investigation into Powell continued. The investigation, which centered on cost overruns in a Fed building project, has been passed to the Fed's inspector general, who will issue a report. Following the news, the likelihood of Warsh's confirmation before May 15 has increased significantly, with some prediction markets showing odds of over 80%.
US Attorney for the District of Columbia Jeanine Pirro stated that the DOJ would close its investigation, but reserved the right to restart it if necessary. The development could grant Trump greater influence over US monetary policy, as having his nominees in key positions would provide him with more allies on the Fed board. This, in turn, could impact decisions on financial policy, including the regulation of the cryptocurrency industry.
Senator Elizabeth Warren criticized the move, describing it as an attempt to clear the path for Warsh's confirmation. Warren noted that the administration is still pursuing a court case against Fed Governor Lisa Cook, and argued that the DOJ's decision was an attempt to install a nominee who would be loyal to the White House. Senator Tillis, on the other hand, expressed support for Warsh, calling him a 'great nominee' and stating that he would vote in favor of his confirmation once the DOJ dropped its investigation into Powell.