The Trump administration has taken a significant step towards exerting greater control over the US financial system, 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. Warsh, a wealthy individual with investments in the crypto sector, appeared in a confirmation hearing recently, but his path to confirmation was previously blocked by Republican Senator Thom Tillis, who had vowed to oppose the nomination as long as the DOJ pursued its investigation into Powell.
The investigation, which centered on cost overruns in a Fed building project, has been passed on to the Fed's inspector general, who will issue a report. The development has boosted the odds of Warsh's confirmation, with some prediction markets now giving him over 80% chance of being confirmed by May 15.
The move has significant implications for the US monetary policy, as having Trump's nominee at the helm of the Federal Reserve would grant the administration greater influence over the central bank's decision-making process. This, in turn, could impact the regulation of the crypto industry and stablecoin issuers. However, not everyone is convinced that the investigation's closure is a genuine attempt to clear the air, with Senator Elizabeth Warren dismissing the move as a ploy to install Warsh as Fed chair.
Warren noted that the administration is still pursuing a separate investigation into Fed Governor Lisa Cook, and warned that the DOJ's decision to drop the investigation into Powell does not necessarily mean that the matter is closed.