The Trump administration has taken a significant step towards solidifying its control over US financial and economic policy, 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, who has been awaiting a final vote from the Senate. The investigation, which was related to cost overruns in a Fed building project, had been a major obstacle to Warsh's confirmation, with Republican Senator Thom Tillis vowing to block the nomination as long as the probe was ongoing. With the investigation now being handled by the Fed's inspector general, the path to confirmation for Warsh has been cleared, and his chances of being confirmed have significantly increased.
The development has major implications for US monetary policy, as having Trump's nominee at the helm of the Federal Reserve would give the administration greater influence over key financial decisions, including those related to the crypto industry and stablecoin issuers. However, not everyone is pleased with the move, with Senator Elizabeth Warren dismissing it as an attempt to clear the way for Warsh's confirmation and noting that the administration is still pursuing Fed Governor Lisa Cook in court.