Trump Administration Drops Investigation, Paving Way for Federal Reserve Nominee

The Trump administration has moved closer to exerting greater control over US financial and economic policy after the Department of Justice dropped its investigation into Federal Reserve Chair Jerome Powell. This development could pave the way for the confirmation of Kevin Warsh, Trump's nominee to replace Powell, who has been awaiting a final Senate vote after a confirmation hearing. Trump has been critical of Powell's handling of interest rates and sees Warsh as a potential remedy. The investigation into Powell, related to cost overruns in a Fed building project, had been a point of contention, with Senator Thom Tillis threatening to block Warsh's confirmation as long as the probe was ongoing. The DOJ's decision to pass the investigation to the Fed's inspector general has led to a significant increase in betting odds on Warsh's confirmation before May 15, rising from around 30% to 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 move could grant Trump greater influence over US monetary policy and leave him with more allies on the Fed board, particularly in decisions related to the crypto industry and stablecoin issuers. However, Senator Elizabeth Warren has dismissed the move, calling it an attempt to clear the path for Warsh's confirmation and noting that the administration is still pursuing a court case against Fed Governor Lisa Cook. Senator Tillis has expressed support for Warsh, calling him a 'great nominee' and indicating that he would vote in favor of Warsh's confirmation now that the DOJ has dropped its investigation into Powell.