Trump Administration Drops Investigation Paving Way for New Federal Reserve Chief

The Trump administration has taken a significant step towards consolidating its influence over the US financial system, as the Department of Justice has dropped its investigation into Federal Reserve Chair Jerome Powell. This move is expected to 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. The investigation, which was related to cost overruns in a Fed building project, had been a major obstacle to Warsh's confirmation, with Republican Senator Thom Tillis threatening to block the nomination as long as the investigation was ongoing. With the DOJ's decision to hand over the investigation to the Fed's inspector general, the path to confirmation for Warsh has been cleared, and his chances of being confirmed have increased significantly, with some predictions suggesting an over 80% chance of confirmation before May 15. The development has significant implications for US monetary policy, as Trump's ability to appoint his own people to the Federal Reserve will give him greater influence over key decisions, including those related to the crypto industry and stablecoin issuers. However, not everyone is convinced that the move is a positive development, with Senator Elizabeth Warren dismissing it as an attempt to clear the path for Warsh's confirmation, and noting that the administration is still pursuing Fed Governor Lisa Cook in court.