A significant development has occurred in the realm of U.S. financial and economic policy, as President Donald Trump's Department of Justice has abandoned its investigation into Federal Reserve Chair Jerome Powell. This move may now facilitate a smoother confirmation process for Trump's nominee, Kevin Warsh, who is slated to replace Powell. Warsh, who boasts substantial wealth, including assets in the cryptocurrency sector, has been awaiting a final Senate vote following his confirmation hearing.
Trump, who has consistently criticized Powell for maintaining high U.S. 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 Fed building project. The DOJ dropped the criminal probe on Friday and requested the Fed's inspector general to investigate the matter and submit a report. In response to this news, the odds of Warsh's confirmation before May 15 skyrocketed from approximately 30% to over 80%. U.S.
Attorney for the District of Columbia Jeanine Pirro stated that she expects a comprehensive report soon and is confident that the outcome will resolve the questions that led to the issuance of subpoenas. Pirro also emphasized that she will not hesitate to restart the investigation if warranted.
Trump's ability to install his own personnel at the Federal Reserve would not only expand his influence over U.S. monetary policy but also provide him with more allies on the Fed board, particularly in decisions related to the crypto industry and stablecoin issuers. The investigation's termination may allow the Republican-majority Senate to expedite Warsh's confirmation, who assured 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 the Justice Department's announcement is merely an attempt to clear the path for Senate Republicans to install Warsh as Fed chair. Tillis, on the other hand, described Warsh as a 'great nominee' and expressed his intention to support him once the DOJ drops its investigation into Powell.