The US Department of Justice's decision to relinquish its investigation into Federal Reserve Chair Jerome Powell has brought President Donald Trump's economic policy ambitions one step closer to fruition, as his nominee to replace Powell, Kevin Warsh, may now have a clearer path to confirmation. Warsh, who has substantial wealth, including assets in the cryptocurrency sector, has been awaiting a final Senate vote after appearing in 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 DOJ dropped the criminal probe on Friday, with US Attorney for the District of Columbia Jeanine Pirro stating that the Fed's inspector general would investigate the matter and issue a report. Following the news, the likelihood of Warsh's confirmation before May 15 surged from approximately 30% to over 80% on Kalshi's prediction betting platform. Pirro noted that she expects a comprehensive report soon and is confident that the outcome will resolve the questions that led to the issuance of subpoenas. She also stated that she would not hesitate to restart the investigation if the facts warrant it.
Having his nominees at the helm of the Federal Reserve would grant Trump greater influence over US monetary policy and provide him with more allies on the Fed board, particularly in decisions regarding the crypto industry and stablecoin issuers. Due to Tillis' threat, Warsh's confirmation may have been delayed as long as the DOJ investigation continued, potentially allowing Powell to remain in charge beyond the May 15 expiration of his term. Now, the Republican-majority Senate may be able to expedite Warsh's confirmation, who emphasized during his hearing that he would act independently of White House direction. Senator Elizabeth Warren, the ranking Democrat on the Senate Banking Committee, dismissed the move, pointing out that the administration is still pursuing Fed Governor Lisa Cook in court.
Warren stated that this is an attempt to clear the path for Senate Republicans to install Warsh as Fed chair, and that the Justice Department's announcement is an empty threat. Tillis, on the other hand, praised Warsh as a 'great nominee' and expressed his intention to support him once the DOJ drops its investigation into Powell.