The US Department of Justice's decision to relinquish its investigation into Federal Reserve Chair Jerome Powell has brought President Donald Trump's economic agenda one step closer to fruition, as his nominee to replace Powell, Kevin Warsh, may now have a clearer path to confirmation. Warsh, who boasts significant personal wealth, including cryptocurrency assets, has been awaiting a final Senate vote following his confirmation hearing.
Trump, who has consistently 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's investigation into Powell continued. The probe, which was dropped on Friday, centered on cost overruns in a Fed building project. US Attorney for the District of Columbia Jeanine Pirro announced that the DOJ has requested the Fed's inspector general to investigate the matter and issue a report.
Following the news, the likelihood of Warsh's confirmation before May 15 surged from 30% to over 80% on Kalshi's prediction betting platform. Pirro stated that she expects a comprehensive report soon and is confident that the outcome will resolve the questions that led to the issuance of subpoenas. The decision to close the investigation, pending the inspector general's inquiry, may pave the way for Warsh's confirmation. This development could grant Trump greater influence over US monetary policy, as having his nominee at the helm of the Federal Reserve would provide him with more allies on the Fed board.
The board's decisions include implementing rules that govern the crypto industry and stablecoin issuers. 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 the Justice Department's announcement is an attempt to clear the path for Senate Republicans to install Warsh as Fed chair. Tillis, on the other hand, expressed his support for Warsh, calling him a 'great nominee' and indicating that he would vote in favor of Warsh's confirmation once the DOJ drops its investigation into Powell.