The US Department of Justice's decision to step back from an investigation into Federal Reserve Chair Jerome Powell may bring President Donald Trump's vision for the US financial and economic policy one step closer to reality, as his nominee to succeed Powell, Kevin Warsh, may now have a clearer path to confirmation. Warsh, who has significant personal wealth, including assets in the cryptocurrency sector, has been awaiting a final Senate vote after a recent confirmation hearing. Trump, who has criticized Powell for maintaining high interest rates, chose Warsh to address this issue, but Senator Thom Tillis had vowed to block the confirmation as long as the DOJ pursued the investigation into Powell over cost overruns in a Fed building project. The investigation was dropped on Friday, with the US Attorney for the District of Columbia, Jeanine Pirro, stating that the DOJ has asked the Fed's inspector general to investigate the matter and issue a report.
Following the news, the likelihood of Warsh's confirmation before May 15 surged from around 30% to over 80% on a prediction market. Pirro noted that she expects a comprehensive report soon and is confident that the outcome will help resolve the questions that led to the investigation, but warned that she would not hesitate to restart the investigation if warranted. Having his nominee lead the Federal Reserve would not only increase Trump's influence over US monetary policy but also give him more allies on the Fed board, which makes decisions on financial policy, including regulations for the crypto industry and stablecoin issuers. Due to Tillis' threat, Warsh's nomination may have been stalled as long as the DOJ investigation continued, potentially leaving Powell in charge beyond the May 15 expiration of his term.
Now, the Republican-majority Senate may be able to move more quickly towards confirming Warsh, 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, pointing out that the administration is still pursuing a court case against Fed Governor Lisa Cook.
Warren stated that the Justice Department's decision is an attempt to clear the path for Senate Republicans to install Warsh as Fed chair. Tillis, on the other hand, called Warsh a 'great nominee' and expressed his intention to vote in favor of Warsh's confirmation once the DOJ drops its investigation into Powell.