The US Department of Justice, under President Donald Trump, has dropped its investigation into Federal Reserve Chair Jerome Powell, which could pave the way for Trump's nominee, Kevin Warsh, to take over as Fed chair. Warsh, who has significant personal wealth, including investments in cryptocurrency, is awaiting a final vote from the Senate after a recent confirmation hearing. Trump has been critical of Powell's management of interest rates and had chosen Warsh to replace him.
However, Republican Senator Thom Tillis had threatened to block Warsh's confirmation as long as the DOJ investigation into Powell continued. The investigation, which was related to cost overruns in a Federal Reserve building project, has been handed over to the Fed's inspector general.
The move has increased the likelihood of Warsh's confirmation, with prediction markets now giving him over 80% odds of being confirmed by May 15. The development could give Trump greater influence over US monetary policy and leave him with more allies on the Fed board, which makes decisions on financial policy, including regulations for the crypto industry.
Senator Elizabeth Warren, the ranking Democrat on the Senate Banking Committee, has dismissed the move, saying it is an attempt to clear the path for Warsh's confirmation and criticizing the administration for pursuing a 'bogus' investigation into Fed Governor Lisa Cook.