Trump's Department of Justice Drops Probe, Paving Way for Federal Reserve Nominee

The US Department of Justice, led by President Donald Trump, has dropped its investigation into Federal Reserve Chair Jerome Powell, potentially paving the way for Trump's nominee, Kevin Warsh, to take over as Fed chair. Warsh, who has significant personal wealth, including assets in the cryptocurrency space, has been awaiting a final Senate vote after appearing at a confirmation hearing. Trump has been critical of Powell's handling of US interest rates and has chosen Warsh as his replacement. However, Republican Senator Thom Tillis had previously stated that he would block Warsh's confirmation as long as the DOJ pursued its investigation into Powell regarding cost overruns in a Fed building project.

With the investigation now dropped, the path to confirmation for Warsh may be clearer. The US Attorney for the District of Columbia, Jeanine Pirro, announced that the DOJ has asked the Fed's inspector general to investigate the renovation situation and issue a report. Following this news, betting odds on Warsh's confirmation before May 15 surged from around 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.

She also noted that she will not hesitate to restart the investigation if the facts warrant it. Having Warsh at the helm of the Federal Reserve would not only increase Trump's influence over US monetary policy but also provide him with more allies on the Fed board as it makes decisions about financial policy, including rules governing the crypto industry and stablecoin issuers. Senator Elizabeth Warren, the ranking Democrat on the Senate Banking Committee, criticized the move, stating that it is an attempt to clear the path for Warsh's confirmation and that the administration is still pursuing Fed Governor Lisa Cook in court. Senator Tillis, on the other hand, expressed his support for Warsh, calling him a 'great nominee' and stating that he would vote in favor of Warsh once the DOJ dropped its investigation into Powell.