The Trump administration's control over US financial policy has taken a significant step forward, as the Department of Justice has abandoned 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.
Warsh, who has substantial personal wealth, including assets in the cryptocurrency sector, has been awaiting a final Senate vote after appearing at a confirmation hearing. Trump, who has consistently criticized Powell for maintaining high US 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 pursued its investigation into Powell regarding cost overruns in a Federal Reserve building project. The investigation was dropped on Friday, with the US Attorney for the District of Columbia, Jeanine Pirro, stating that the DOJ has requested the Federal Reserve's inspector general to examine the situation and provide a report. Following the news, the odds of Warsh's confirmation before May 15 surged from approximately 30% to over 80%. Pirro wrote on social media, 'I expect a comprehensive report soon and am confident the outcome will help resolve the questions that led to the issuance of subpoenas.
I have directed my office to close our investigation as the inspector general conducts this inquiry. Note that I will not hesitate to restart a criminal investigation if the facts warrant it.' Trump's ability to appoint his own officials to the Federal Reserve would not only increase his influence over US monetary policy but also provide him with more allies on the Fed board, which makes decisions on financial policy, including regulations governing the crypto industry and stablecoin issuers. Due to Tillis' threat, Warsh's nomination may have been stalled as long as the DOJ pursued its investigation, potentially allowing Powell to remain in charge of the Fed beyond the May 15 expiration of his term. Now, the Republican-majority Senate may be able to expedite Warsh's confirmation, who insisted during his hearing that he would act independently of White House direction.
Senator Elizabeth Warren, the ranking Democrat on the Senate Banking Committee, criticized the move, stating, 'This is an attempt to clear the path for Senate Republicans to install President Trump's nominee, Kevin Warsh, as Fed chair.' Warren noted that the administration is still pursuing a case against Fed Governor Lisa Cook. 'Let's be clear what the Justice Department announced today: They threatened to restart the bogus criminal investigation into Fed Chair Powell at any time while failing to drop their ridiculous criminal probe against Governor Lisa Cook,' Warren said in a statement. Tillis described Warsh as a 'great nominee' and expressed his intention to vote in favor of Warsh once the DOJ dropped its investigation into Powell.